Index

Future Years Defense Program: Funding Increase and Planned Savings in
Fiscal Year 2000 Program Are at Risk (Letter Report, 11/22/1999,
GAO/NSIAD-00-11).

The Pentagon's Future Years Defense Program (FYDP) is the official
document that summarizes the force levels and funding associated with
specific programs that the military would like Congress to approve. The
fiscal year 2000 FYDP requested an additional $50.8 billion to the
previously requested $1,053 billion total funding for fiscal years 2000
through 2003. This report identifies the major changes and adjustments
in the 2000 FYDP as compared to the 1999 FYDP and discusses the risks
that the 2000 FYDP faces that may prevent it from being implemented as
planned.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-00-11
     TITLE:  Future Years Defense Program: Funding Increase and Planned
	     Savings in Fiscal Year 2000 Program Are at Risk
      DATE:  11/22/1999
   SUBJECT:  Defense budgets
	     Defense cost control
	     Defense appropriations
	     Presidential budgets
	     Future budget projections
	     Comparative analysis
	     Defense procurement
	     Defense economic analysis
IDENTIFIER:  DOD Future Years Defense Program
	     DOD Planning, Programming, and Budgeting System
	     DOD Quadrennial Defense Review
	     Social Security Program
	     Defense Health Program
	     Kosovo (Serbia)
	     Overseas Contingency Operations Transfer Fund
	     DOD Military Housing Privatization Initiative
	     Defense Reform Initiative
	     FYDP

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GAO/NSIAD-00-11

Report to the Chairman, Committee on the Budget, House of Representatives

November 1999

Future Years Defense Program

Funding Increase and Planned Savings in Fiscal Year 2000 Program Are at
Risk
*****************
<Graphic -- Download the PDF file to
view.>
*****************

GAO/NSIAD-00-11

Letter                                                                     3

Appendixes

Appendix I:Department of Defense's 1999 and 2000 Future Years Defense
Programs by Account

                                                                         42

Appendix II:Comments From the Department of Defense

                                                                         57

Table 1:  DOD's 1999 and 2000 FYDPs, by Primary Appropriation 
Category (total obligational authority in billions of fiscal 
year 2000 dollars)                               9

Table 2:  Sources of DOD's 2000 FYDP Savings    13

Table 3:  Military Personnel Appropriation Accounts, 1999 and 
2000 FYDPs (total obligational authority in millions of fiscal 
year 2000 dollars)                              43

Table 4:  Operation and Maintenance Appropriation Accounts, 
1999 and 2000 FYDPs (total obligational authority in millions 
of fiscal year 2000 dollars)                    45

Table 5:  Procurement Appropriation Category by Component, 
1999 and 2000 FYDPs (total obligational authority in millions 
of fiscal year 2000 dollars)                    47

Table 6:  Army Procurement Appropriation Accounts, 1999 and 
2000 FYDPs (total obligational authority in millions of fiscal
year 2000 dollars)                              48

Table 7:  Navy/Marine Corps Procurement Appropriation 
Accounts, 1999 and 2000 FYDPs (total obligational authority 
in millions of fiscal year 2000 dollars)        49

Table 8:  Air Force Procurement Appropriations Accounts, 1999 
and 2000 FYDPs (total obligational authority in millions of 
fiscal year 2000 dollars)                       50

Table 9:  Defensewide Procurement Appropriation Accounts, 
1999 and 2000 FYDPs (total obligational authority in millions 
of fiscal year 2000 dollars)                    51

Table 10:  Research, Development, Test, and Evaluation 
Appropriation Accounts, 1999 and 2000 FYDPs (total 
obligational authority in millions of fiscal year 2000 dollars)52

Table 11:  Military Construction Appropriation Accounts, 1999 
and 2000 FYDPs (total obligational authority in millions of 
fiscal year 2000 dollars)                       53

Table 12:  Family Housing Appropriation Accounts, 1999 and 
2000 FYDPs (total obligational authority in millions of fiscal 
year 2000 dollars)                              55

Table 13:  Revolving and Management Funds, 1999 and 2000 
FYDPs (total obligational authority in millions of fiscal year 
2000 dollars)                                   56

Table 14:  Defensewide Contingencies, 1999 and 2000 FYDPs 
(total obligational authority in millions of fiscal year 2000 
dollars)                                        56

Figure 1:  Annual Military Personnel Funding Levels in 1999 and 
2000 FYDPs (in billions of fiscal year 2000 dollars)16

Figure 2:  Annual Operation and Maintenance Funding Levels (in 
1999 and 2000 FYDPS)                            19

Figure 3:  Annual Defense Health Program Funding Levels in 1999 
and 2000 FYDPs (in billions of fiscal year 2000 dollars)21

Figure 4:  Annual Procurement Funding Levels in the 1999 and 
2000 FYDPs (in billions of fiscal year 2000 dollars)25

Figure 5:  Annual Family Housing Funding Levels in the 1999 
and 2000 FYDPs (in billions of constant fiscal year 2000 dollars)28

Figure 6:  Mission and Direct Infrastructure Programs in 1999 
and 2000 FYDPs                                  33

Figure 7:  Military Personnel Levels in the 1999 and 2000 FYDPs 
(military personnel in thousands)               37

Figure 8:  Civilian Personnel Levels in the 1999 and 2000 FYDPs 
(civilian personnel in thousands)               38

DOD     Department of Defense

FYDP    Future Years Defense Program

O&M     operation and maintenance

RDT&E   research, development, test, and evaluation

REDUX   Military Retirement Reform Act of 1986

The first 1999 emergency supplemental appropriation was provided in the
Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999
(P.L. 105-277, 
                                                      National Security and
                                             International Affairs Division

B-283583

November 22, 1999

The Honorable John R. Kasich
Chairman, Committee on the Budget
House of Representatives

Dear Mr. Chairman:

The Department of Defense's (DOD) Future Years Defense Program (FYDP) is
the official document that summarizes the force levels and funding
associated with specific programs that the Secretary of Defense would like
to see approved by Congress. The FYDP presents estimated appropriation
needs for the budget year for which funds are being requested from
Congress and at least the 4 years following it. The fiscal year 2000 FYDP
requested an additional $50.8 billion to the previously requested $1,053
billion total funding for fiscal years 2000-2003./Footnote1/ As requested,
this report identifies the major changes and adjustments in the 2000 FYDP
as compared to the 1999 FYDP and discusses the risks that the 2000 FYDP
faces that may prevent it from being implemented as planned. 

The FYDP reflects decisions made in the DOD Planning, Programming, and
Budgeting System, which is intended to produce the best possible mixture
of forces, equipment, and support to accomplish DOD's mission. In
reporting the results of the 1997 Quadrennial Defense Review, a
congressionally mandated review of defense strategy and force
requirements, DOD noted that it had not always been able to implement past
FYDPs as planned because DOD underestimated some costs of its 
day-to-day operations and often did not fully achieve savings projected
for efficiency enhancing initiatives. In addition, DOD or Congress can
modify policies or begin new programs and operations that can require
changes to the FYDP. The 2000 FYDP was DOD's second FYDP since the
Quadrennial Defense Review in which DOD attempted to achieve a better
balance in DOD's financial plans to meet its military forces' current
requirements and address long-term modernization needs. The Review
examined the likely and emerging security threats and opportunities facing
the United States and developed recommendations for the post-Cold War era.

The 1999 FYDP supported the President's 1999 budget and included budget
estimates for 1999-2003. The 2000 FYDP supported the President's 2000
budget and included budget estimates for 2000-2005. This report
concentrates on the period common to both FYDPs, 2000-2003. Our report
reflects only that portion of the first 1999 supplemental appropriation
that has been declared "emergency" and released by the Office of
Management and Budget prior to the 2000 budget submission in February
1999, and does not reflect the additional 1999 and 2000 resources provided
to DOD in the second 1999 emergency supplemental appropriation because it
was not reflected in the President's budget and FYDP./Footnote2/ The
report also discusses recent actions taken by Congress on DOD's budget for
2000 during its consideration and enactment on the Fiscal Year 2000
National Defense Authorization and Appropriations Acts.

Results in Brief

DOD planned to increase the funding of its three priority areas in the 
2000 FYDP from an expected overall increase in its budget, as compared to
past FYDPs where it planned to finance increases to its priority areas
from other program reductions and savings. More specifically, total
funding in the 2000 FYDP was $50.8 billion (4.8 percent) higher than in
the 1999 FYDP over the 2000-2003 period. Of the $50.8 billion, DOD
requested congressional approval for $45.4 billion in additional budget
authority and $1.65 billion in rescissions of previously appropriated
funds./Footnote3/ The remainder was to come from unobligated funds from
prior years, which remain available for future obligations. Over half of
the funding increase in the 2000 FYDP is for operation and maintenance
accounts, 23 percent for military personnel accounts, and 16 percent for
procurement accounts, which reflects DOD's three priority areas:
readiness, quality of life, and modernization. In addition to the $50.8
billion, DOD expected to apply 
$15.5 billion in savings achieved from existing programs in the 1999 FYDP
to the priorities in the 2000 FYDP. Most of the savings--over $11 billion--
were expected to occur because of lower inflation rates than projected in
the 1999 FYDP./Footnote4/

There are risks that DOD may not be able to implement its 2000 FYDP as
planned because it may not receive all the funds it expects. Of DOD's
total budget for the common years (2000-2003), at least $50 billion is at
risk. The FYDP, which supported the President's budget, projected that the 
$45.4 billion increase in additional funding for the 2000 FYDP was to come
from a share of the overall anticipated government budget surplus, which
is uncertain. The surplus is contingent upon several factors, including
continued economic growth, legislative agreements that address the
financial soundness of the Social Security program, and adherence to
statutory budget caps that limit spending for certain programs.
Importantly, these budget caps apply to all discretionary spending, and
the defense budget is included within the overall discretionary spending
limit. Also, both Congress and the administration must agree to allocate
some of the anticipated surplus to DOD. In addition, DOD planned on
congressional approval of a $1.65 billion rescission of previously
appropriated funds, however, as of the beginning of November, Congress has
not fully supported the requested rescission.

Some of the expected $15.5 billion in savings and adjustments in the 
2000 FYDP may not occur as planned. DOD's expected savings of 
$2.82 billion from lower fuel prices may not materialize because current
fuel projections are higher than those used to develop the 2000 FYDP.
DOD's expected savings of $1.22 billion from military payroll adjustments
are still questionable since they are dependent on pending legislation.
Also, DOD requested congressional approval to fund fiscal year 2000
military construction projects over 2 years instead of 1 year, but
Congress rejected DOD's proposal to spread military construction funding
over 2 years.

There are several other areas of risk that may impact DOD's ability to
implement its 2000 FYDP as planned. First, Congress authorized a larger
military pay and benefits package in the National Defense Authorization
Act for Fiscal Year 2000 than proposed by DOD, and provided funds for this
larger pay package for only fiscal year 2000. Without higher levels of
funding than currently planned after fiscal year 2000, DOD will need to
look elsewhere in its budget to fund these increased benefits. Second,
funding requirements for the Defense Health Program are routinely
understated. DOD stated that the operation and maintenance portion of the
Defense Health Program is underfunded by almost $73 million. Third, no
funds were included in the 2000 FYDP for U.S. involvement in Kosovo, and
currently available funding may not be sufficient to cover the $2.5
billion estimated cost of Kosovo operations in fiscal year 2000. Fourth,
DOD has had difficulty in recent years meeting its planned growth in
procurement funding because it has had to move those funds to other
priorities, such as readiness. Fifth, family housing accounts may require
more funding than programmed in the 2000 FYDP. Finally, DOD assumed
savings from reductions in infrastructure through further implementation
of competitive sourcing-which allows the private sector to bid on
performing selected activities and functions-and two new rounds of base
closures. We have previously reported that DOD's projected savings from

competitive sourcing are overly optimistic at least in the short term. In
addition, Congress did not authorize additional base closure rounds.

Background

The 2000 FYDP reflected the recommendations of DOD's May 1997 Quadrennial
Defense Review, which analyzed U.S. military strategy, force structure
readiness, modernization, and infrastructure. In its 1999 Annual Report to
the President and the Congress, DOD stated that the armed forces remain
fully capable of executing the Quadrennial Defense Review strategy, but
ensuring readiness today and in the future has become increasingly
difficult. Further, forces that would deploy in the later stages of a
conflict are less ready, recruiting and retention rates have declined, and
modernization schedules are harder to maintain. The 2000 FYDP was
developed to address these problems. The areas targeted for higher funding
levels in the 2000 FYDP continue to be readiness and weapons
modernization, as in the 1999 FYDP, with an added emphasis on personnel
issues, specifically recruiting and retention.

Our earlier report on DOD's 1999 FYDP showed that although DOD made
adjustments to decrease the risk that funds would be transferred from
procurement to unplanned operating expenses, the 1999-2003 program, like
previous programs, was based on optimistic assumptions about savings and
procurement plans./Footnote5/ We had found that DOD made optimistic
assumptions about the potential to achieve savings through competitive
sourcing and reengineering, and these plans may not be completed on
schedule./Footnote6/ We also had stated that if the projected savings from
other sources do not materialize, DOD would have to adjust future budgets
by cutting programs and/or requesting additional budget authority.
Further, we pointed out that the 1999 FYDP projected that procurement
funding would increase in real terms by about 29 percent while DOD's total
budget would remain relatively flat, despite the experience over the past
32 years that DOD procurement funding rises and falls in direct proportion
to movements in its total budget. Also, planned funding increases for
modern weapon systems were shifted further into the future, as in previous
FYDPs. This movement creates a large demand for procurement funds in later
years, which, according to DOD, tends to disrupt planned modernization
programs unless additional funds are made available.

Total Funding in DOD's 2000 FYDP Is Higher Than in the 1999 FYDP

Unlike prior FYDPs where DOD planned to increase funds for priorities by
reducing costs in other areas and applying the savings to the priorities,
the 2000 FYDP included DOD's plan to fund priorities from an increase in
total funding. Over the common 4 year period, 2000-2003, in the 1999 and
2000 FYDPs, as shown in table 1, DOD increased its planned total funding
by $50.8 billion, a 4.8-percent increase over the funding levels projected
in the 1999 FYDP. DOD projected that the $50.8 billion will come from a 
$45.4 billion increase in DOD's overall funding and a $1.65-billion
rescission of previously appropriated funds to offset fiscal year 2000
funding. The remainder was from unobligated funds from prior years, which
remain available for obligation. Also, there was growth within each FYDP
over the common period. In the 2000 FYDP, the total program was projected
to grow by 2.8 percent over the common period. This funding growth was
over three times the 0.9-percent growth identified in the 1999 FYDP for
this period.

Table****Helvetica:x11****1:    DOD's 1999 and 2000 FYDPs, by Primary
                                Appropriation Category (total obligational
                                authority in billions of fiscal year 2000
                                dollars)

---------------------------------------------------------------------------
| Appropriation  : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category       :       :       :       :       :       :       :    nt  |
|                :       :       :       :       :       :       : Chang  |
|                :       :       :       :       :       :       :     e  |
|                :       :       :       :       :       :       : 2000-  |
|                :       :       :       :       :       :       :  2003  |
|-------------------------------------------------------------------------|
| Military       : 1999  : $71.7 : $70.7 : $70.0 : $69.8 : $282.2:        |
| personnel      :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  :  73.7 :  73.8 :  73.4 :  73.2 : 294.1 :        |
|-------------------------------------------------------------------------|
|                : Change:   2.0 :   3.1 :   3.3 :   3.4 :  11.8 :   4.2  |
|-------------------------------------------------------------------------|
| Operation and  : 1999  :  94.4 :  94.3 :  93.9 :  93.9 : 376.5 :        |
| maintenance    :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  : 103.3 : 100.8 :  99.4 :  99.5 : 402.9 :        |
|-------------------------------------------------------------------------|
|                : Change:   8.9 :   6.5 :   5.5 :   5.6 :  26.4 :   7.0  |
|-------------------------------------------------------------------------|
| Procurement    : 1999  :  53.3 :  59.2 :  57.5 :  59.0 : 228.9 :        |
|-------------------------------------------------------------------------|
|                : 2000  :  53.0 :  60.7 :  60.2 :  63.0 : 236.9 :        |
|-------------------------------------------------------------------------|
|                : Change:  -0.2 :   1.5 :   2.7 :   4.0 :   8.0 :   3.5  |
|-------------------------------------------------------------------------|
| Research,      : 1999  :  33.5 :  32.0 :  31.9 :  32.0 : 129.4 :        |
| development,   :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| test, and      : 2000  :  34.4 :  33.7 :  33.4 :  32.6 : 134.1 :        |
| evaluation     :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : Change:   0.9 :   1.7 :   1.5 :   0.6 :   4.7 :   3.6  |
|-------------------------------------------------------------------------|
| Military       : 1999  :   4.8 :   4.3 :   3.5 :   3.7 :  16.3 :        |
| construction   :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  :   2.3 :   7.0 :   4.1 :   4.1 :  17.5 :        |
|-------------------------------------------------------------------------|
|                : Change:  -2.5 :   2.7 :   0.6 :   0.4 :   1.2 :   7.3  |
|-------------------------------------------------------------------------|
| Family housing : 1999  :   3.8 :   3.8 :   3.7 :   3.9 :  15.2 :        |
|-------------------------------------------------------------------------|
|                : 2000  :   3.2 :   3.8 :   3.5 :   3.6 :  14.0 :        |
|-------------------------------------------------------------------------|
|                : Change:  -0.7 :     0 :  -0.2 :  -0.3 :  -1.2 :  -7.7  |
|-------------------------------------------------------------------------|
| Revolving and  : 1999  :   0.8 :   0.4 :   0.4 :   1.0 :   2.5 :        |
| management     :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| funds          : 2000  :   0.4 :   0.8 :   0.5 :   0.7 :   2.4 :        |
|-------------------------------------------------------------------------|
|                : Change:  -0.3 :   0.4 :   0.2 :  -0.3 :  -0.1 :  -4.3  |
|-------------------------------------------------------------------------|
| Defensewide    : 1999  :     0 :     0 :   0.8 :   1.3 :   2.1 :        |
|-------------------------------------------------------------------------|
| contingencies  : 2000  :     0 :     0 :   0.8 :   1.3 :   2.1 :        |
|-------------------------------------------------------------------------|
|                : Change:     0 :     0 :     0 :     0 :     0 :  -0.4  |
|-------------------------------------------------------------------------|
| Total          : 1999  : $262.3: $264.5: $261.7: $264.6: $1,05 :   0.9  |
|                :       :       :       :       :       :   3.1 :        |
|-------------------------------------------------------------------------|
|                : 2000  : $270.3: $280.5: $275.2: $278.0: $1,10 :   2.8  |
|                :       :       :       :       :       :   4.0 :        |
|-------------------------------------------------------------------------|
|                : Change:  $8.0 : $15.9 : $13.5 : $13.4 : $50.8 :   4.8  |
---------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Over half of the increase was programmed in operation and maintenance
accounts, 23 percent in military personnel accounts, and 16 percent in
procurement accounts. These increases reflected DOD's plan to provide
additional resources for readiness, quality of life, and modernization
priorities. DOD stated that this plan strikes a balance between immediate
military needs, most notably force readiness and quality of life, and 
long-term safeguards, including the development and procurement of new
weapons and technology, as recommended by the Quadrennial Defense Review.
(App. I shows the differences between accounts in the 1999 and 2000 FYDPs
for each appropriation over the common years, 2000-2003.)

Numerous Risks Exist in the 2000 FYDP

DOD may not achieve its 2000 FYDP as planned due to risks in several
areas. Of DOD's total budget for the common years, at least $50 billion is
at risk. The majority of the increased funding DOD programmed in the
2000 FYDP was projected to come from a share of the overall federal budget
surplus, which is uncertain. DOD planned on congressional approval of a
$1.65-billion rescission of previously appropriated funds, however, as of
the beginning of November, Congress has not fully supported the requested
rescission. Some of the expected $15.5 billion in savings and adjustments
in the 2000 FTDP may not occur as planned. Savings from lower fuel costs
and infrastructure reduction initiatives, such as competitive sourcing,
may not occur to the extent DOD programmed in the 2000 FYDP. DOD requested
congressional approval to fund fiscal year 2000 military construction
projects over 2 years instead of 1 year, but Congress rejected DOD's
proposal. Funding requirements for the Defense Health Program are
routinely understated and DOD has had difficulty in recent years meeting
its planned growth in procurement funding because it has had to move those
funds to other priorities. Two new risks have emerged since the 2000 FYDP
was submitted to Congress. First, Congress authorized an even larger
military pay and benefits package in the National Defense Authorization
Act for Fiscal Year 2000 than proposed by DOD, and these additional
benefits will have ongoing costs that are not factored into the
FYDP./Footnote7/ Second, no funds were included in the 2000 FYDP for U.S.
involvement in Kosovo, and current funding available for obligation in
2000 may not be sufficient to cover the estimated cost of Kosovo operations.

Most of the Additional Resources Planned for in the 2000 FYDP Are Uncertain
---------------------------------------------------------------------------

Both the projected budget surplus from which the administration plans to
receive the additional funding and an agreement on the amount of the
surplus that would be allocated to DOD are uncertain. Also, Congress has
not fully supported DOD's requested rescission.

Of the $50.8 billion in additional funding programmed in the 2000 FYDP,
$45.4 billion was projected to come from the total federal budget surplus.
This estimated amount is uncertain for several reasons. First, budget
surplus projections are uncertain. The administration recognizes that
budget projections for any future period are inherently uncertain.
Likewise, the Congressional Budget Office reported that the average change
between its estimates of annual deficits or surpluses 5 years into the
future and the actual results was substantial./Footnote8/ Second, the
surplus is contingent on continued economic growth, which in itself is
uncertain. Third, the administration's proposal to allocate a portion of
the surplus to DOD is contingent upon the enactment of legislation that
would address the financial soundness of the Social Security program. As
of the end of October 1999, no legislation had been passed. Lastly, both
the President and Congress must agree on using part of the budget surplus
to increase DOD's overall annual funding levels. Although both the
President and Congress want to increase funds for DOD, there is no
agreement as to how much that increase will be over the period covered by
the 2000 FYDP. As a result, the programmed funding increases are uncertain.

DOD also requested $1.65 billion in unspecified rescissions of prior year
funding to offset total fiscal year 2000 defense funding. Congress
approved $31.4 million in rescissions in the second Fiscal Year 1999
Emergency Supplemental Appropriations Act. The Fiscal Year 2000 Defense
Appropriations Act rescinded $802.3 million from specified appropriation
accounts. Therefore, DOD did not get the entire $1.65 billion in
rescissions it requested but the Congress could take further action at a
later date.

Inflation Savings Appear Probable, but Other Savings Are at Risk
----------------------------------------------------------------

As shown in table 2, DOD estimated that it would save $15.5 billion as a
result of lower inflation rates and fuel costs, and a reduction in
military payroll costs. The President directed DOD to retain the savings
and allocate them to the Department's most pressing needs. In addition, to
free up funds in 2000, DOD requested only $5.4 billion of the $8.5 billion
projected cost of fiscal year 2000 military construction projects, and
requested the remaining $3.1 billion as an advance fiscal year 2001
appropriation./Footnote9/

Table****Helvetica:x11****2:    Sources of DOD's 2000 FYDP Savings

-------------------------------------------------------------------------
| In billions of constant fiscal year 2000 dollars                      |
|-----------------------------------------------------------------------|
| Source                :        :        :        :        :    Total  |
|                       :        :        :        :        :           |
|                       :   2000 :   2001 :   2002 :   2003 : 2000-2003 |
|-----------------------------------------------------------------------|
| Savings from lower    :  $2.47 :  $2.81 :  $2.97 :  $3.17 :   $11.42  |
| estimated inflation   :        :        :        :        :           |
| rates                 :        :        :        :        :           |
|-----------------------------------------------------------------------|
| Savings from lower    :   0.97 :   0.64 :   0.60 :   0.61 :     2.82  |
| estimated cost of     :        :        :        :        :           |
| fuels                 :        :        :        :        :           |
|-----------------------------------------------------------------------|
| Military payroll      :   0.32 :   0.31 :   0.30 :   0.29 :     1.22  |
| adjustments           :        :        :        :        :           |
|-----------------------------------------------------------------------|
| Total savings         :  $3.76 :  $3.76 :  $3.87 :  $4.07 :   $15.46  |
-------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of DOD data.

In the 2000 FYDP, DOD included $11.4 billion in inflation savings for the
2000-2003 period due to a decline in projected inflation rates provided by
the Office of Management and Budget. These savings resulted from using
mostly lower projected inflation rates to develop the 2000 FYDP than for
the 1999 FYDP. The administration's mid-year budget update, which revised
the projections for 1998-2005 and beyond, reflected lower inflation rates
for 1999 and 2000 and slightly higher inflation rates for 2002 and beyond.
According to an Office of Management and Budget official, the reductions
in fiscal years 1999 and 2000 compounded over time combined with the small
increase in the later years results in almost no net change from the
inflation savings estimate included in the 2000 FYDP. Therefore, the most
recent inflation rate projections continue to support DOD's projected
inflation savings in the 2000 FYDP.

DOD projected an additional $2.8 billion in savings during the 2000-2003
period from lower fuel costs for ship and jet fuel, diesel oil, and
gasoline. The Office of Management and Budget provided DOD with revised
inflation estimates for fuel purchases for inclusion in the 2000
President's budget. The estimates lowered the projected cost of fuel from
previously budgeted levels. However, the fuel cost factors the Office of
Management and Budget provided to DOD in May 1999 were higher than those
used to develop the 2000 President's budget. Additionally, as of August
1999, the Department of Energy projected fuel costs would be higher than
the Office of Management and Budget's estimates through 2000. Given the
projected fuel cost increases, there are risks associated with DOD's
ability to achieve all of the savings that were based on lower fuel costs.

The remaining $1.2 billion in expected savings come from military payroll
adjustments. DOD pays wage credits into the Social Security Trust Fund for
non-taxed benefits for which servicemembers pay no social security tax.
DOD, however, has submitted a legislative proposal to eliminate these
credits, which would result in savings to DOD. As of September 1999, no
congressional action had been taken on this proposal. If this proposal
does not pass, these savings will not be realized.

To free up more resources for fiscal year 2000, DOD proposed a plan to
finance fiscal year 2000 military construction projects by combining
regular and advance appropriations. The regular appropriations only funded
DOD's expected fiscal year 2000 obligations for military construction
projects scheduled to begin in 2000. The remaining funding for the fiscal
year 2000 projects were to come from advance fiscal year 2001
appropriations. This proposal was designed to allow DOD to continue with
planned fiscal year 2000 construction projects while providing additional
funds to support other high priority programs in 2000 as well as keep the
budget within the 2000 budget caps as mandated by the 1997 Budget
Enforcement Act./Footnote10/ Congress rejected DOD's proposal because it
was concerned that incremental funding would lead to increased costs and
delayed completion of projects, and that this funding approach would be
implemented permanently, creating a large demand for military construction
funds beyond 2000. The Fiscal Year 2000 Military Construction
Appropriations Act provides $8.4 billion in funding for DOD's fiscal year
2000 military construction priorities, $100 million less than full
funding./Footnote11/

DOD Will Likely Require Military Pay Funding Above Levels Programmed in
the 2000 FYDP
---------------------------------------------------------------------------

DOD proposed four changes to the current military compensation system to
address the services' recruiting and retention problems. The 2000 FYDP
included funding for these four proposals, resulting in the higher annual
funding levels for military personnel salaries and benefits, as shown in
figure 1. Legislative action, though, introduced risk into the
Department's 2000 FYDP military pay program because the National Defense
Authorization Act for Fiscal Year 2000 provides an even larger military
compensation package than proposed by DOD. The second 1999 emergency
supplemental appropriations act and the Fiscal Year 2000 Defense
Appropriations Act only provide sufficient funding for this larger package
in fiscal year 2000./Footnote12/ Therefore, DOD will require higher annual
funding levels to meet the additional military pay requirements.

Figure****Helvetica:x11****1:    Annual Military Personnel Funding Levels
                                 in 1999 and 2000 FYDPs (in billions of
                                 fiscal year 2000
                                 dollars)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: Our analysis of FYDP data.

Proposed changes to military base pay account for the largest part of the
funding increase in the 2000 FYDP. DOD proposed to partially alleviate the
perceived military-civilian pay gap by raising military base pay by 
4.4 percent in 2000, the Employment Cost Index of 4.3 percent plus 
0.1 percent./Footnote13/ DOD proposed annual raises of 3.9 percent
thereafter for the remainder of the 2000 FYDP period, which is the
projected Employment Cost Index rate in the future.

Pay table reform was another military pay initiative. The proposal
provides progressively higher pay increases for servicemembers for each
promotion they receive, so pay increases for promotions would generally be
higher than those tied to longevity. These increases were meant to be
incentives to remain in the service for noncommissioned and mid-grade
commissioned officers with the experience, skills, and knowledge most
needed by the services.

DOD also proposed to increase funding for other incentives to enlist and
retain people with certain skills. The services are currently using
special and incentive pays to retain personnel with the most critical
skills, such as pilots. Since skill areas, such as surface warfare
officers, are experiencing shortages, the 2000 FYDP added retention
bonuses for personnel possessing those skills. To help meet recruiting
goals, the services increased funding for recruiting incentives. For
example, the Army and the Navy included funding for enlistment bonuses
during slow recruiting months (Feb. through May) and increases for college
fund incentives, while the Air Force planned to increase its advertising
budget for recruiting.

Finally, DOD proposed to reverse the changes made to the military
retirement system by the Military Retirement Reform Act of
1986./Footnote14/ This act, commonly known as REDUX, reduced anticipated
future retired pay levels for personnel who entered the military service
after August 1, 1986, from 50 to 40 percent of base pay for servicemembers
retiring with 
20 years of service. In addition, DOD's proposal provided cost-of-living
increases for retirees during periods of low inflation. All of the
services believe that the REDUX system negatively affects career retention
behavior.

The National Defense Authorization Act for Fiscal Year 2000 was passed on
October 5, 1999. This law provides a substantially larger pay and benefits
package than the administration proposed. For example, the law provides a
4.8-percent pay raise in 2000 instead of the 4.4 percent proposed by the
administration. Pay and benefits increases constitute permanent
legislation. They are included in defense authorization legislation, not
in appropriation measures, though the amount of money provided for
military personnel in the appropriations act is directly affected by any
changes. Pay increases for 2001-2006 will be based on the Employment Cost
Index plus 0.5 percent instead of the administration's proposed annual 3.9
percent increases for 2001-2005.

The second 1999 supplemental appropriations act and the Fiscal Year 2000
Defense Appropriations Act have sufficient funding to cover the larger
congressionally approved military pay and benefits packages for 2000.
However, without higher levels of funding than currently planned after
2000, DOD will need to look elsewhere in its budget to fund these
benefits, possibly adversely affecting its current plans to meet its
procurement and readiness goals.

Risks Exist in Achieving Higher Operation and Maintenance Funding Levels
------------------------------------------------------------------------

Like the 1999 FYDP, the 2000 FYDP provided for increased operation and
maintenance (O&M) funding. According to DOD, the additional funds are
needed to maintain U.S. forces' readiness. DOD may not be able to execute
its O&M program as planned, though, due to several factors. First, it is
unclear at this point if congressional action on the 2000 budget provided
DOD with more or less O&M funding than DOD stated is required to maintain
readiness. Second, the funding requirements for the Defense Health
Program, which is over 10 percent of DOD's annual O&M budget, are
routinely underestimated. Finally, DOD may not have sufficient funding for
its ongoing contingency operations in locations such as Kosovo.

To address growing readiness concerns, DOD allocated higher annual funding
levels for O&M in the 2000 FYDP than in the 1999 FYDP, as shown in figure
2./Footnote15/ For the 2000-2003 period, total funding was $26.4 billion
higher, a 7-percent increase. The O&M portion of the defense budget is
most closely related to readiness. The O&M budget funds the costs of
purchasing fuel, spare parts, and other items associated with training and
military operations.

Figure****Helvetica:x11****2:    Annual Operation and Maintenance Funding
                                 Levels (in 1999 and 2000
                                 FYDPS)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: Our analysis of FYDP data.

According to DOD, its readiness indicators in 1998 showed declines in
readiness. In September 1998, the service chiefs testified before the
Senate Committee on Armed Services that they needed more resources to
fully address emerging readiness concerns, and in October 1998, the Office
of Management and Budget, on behalf of the administration, submitted a
supplemental appropriations request for a $1-billion defense readiness
package to the Chairmen of the Appropriations Committees. In response,
Congress provided $1.3 billion in additional readiness funding in the
first 1999 emergency supplemental appropriations act of 1999. Although DOD
testified before the House Armed Services Readiness Subcommittee in
February 1999 that the principal purpose of the overall funding level
increase in the 2000 FYDP was to meet the most urgent near and long-term
readiness needs, Congress provided $2.35 billion in additional readiness
funding in the second 1999 emergency supplemental appropriations act. 

The readiness items included in both 1999 emergency supplemental
appropriations were some of the same items that are priority items for the
services in the 2000 FYDP. For example, the Army planned to increase funds
for flying hours, training, barracks, depot maintenance, and installation
improvements. The Navy increased funding for additional flying hours, ship
maintenance, and spare parts. The Air Force increased funding for spare
parts and recruiting and retention initiatives. In addition, DOD's O&M
program also includes $10 billion in planned pay raises for DOD civilians.

There is some indication that DOD may not get the O&M funds it said it
needed to sustain readiness. In addition to the funding provided in the
second fiscal year 1999 emergency supplemental appropriation, the Fiscal
Year 2000 Defense Appropriations Act provides DOD with more O&M funding
than it requested in its budget. However, there are offsets that may
result in DOD receiving less O&M funding than it requested. The act
includes offsets to the amount of O&M funding provided in the act equal to
$1.05 billion, which was provided in the second fiscal year 1999 emergency
supplemental appropriation. The act also includes O&M offsets of 
$363 million to reflect savings from civilian pay, favorable foreign
currency fluctuations, and competitive sourcing.

DOD Has Difficulty Estimating Funding Requirements of the Defense Health
Program

In 2000, the Defense Health Program was projected to account for over 
10 percent of DOD's 2000 O&M appropriations. Defense Health Program
funding was projected to receive $1.4 billion (3.4 percent) more funding
over the 2000-2003 period in the 2000 FYDP than in the 1999 FYDP. Figure 3
shows annual funding level projections from both FYDPs.

Figure****Helvetica:x11****3:    Annual Defense Health Program Funding
                                 Levels in 1999 and 2000 FYDPs (in
                                 billions of fiscal year 2000
                                 dollars)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: Our analysis of FYDP data.

The funding level projected for the Defense Health Program in the 
2000 FYDP may not be adequate to execute the program as planned. In the
last few years, funding requirements for the program, as presented to
Congress as part of the President's budget in February, have been
underestimated. The Fiscal Year 1997 Defense Appropriations Act added
about $475 million to the program to address a shortfall discovered after
the initial budget was submitted./Footnote16/ In 1998, DOD's Comptroller
submitted a budget amendment to add $274 million to the program to fully
fund it. Despite DOD's testimony in February 1998 that the core programs
of the 1999 Defense Health Program were fully funded, the services later
reported that the funding shortfall could be as much as $613 million. The
Defense Health Program received an additional $347 million for 1999 than
requested in DOD's original budget. 

The Department of Defense Appropriations Act for Fiscal Year 2000 provides
$320 million more in funding than requested by DOD for the Defense Health
Program. Over 85 percent of these funds are allocated to research,
development, test, and evaluation activities. Congress added 
$108 million in new O&M programs, which were not requested by the
administration. Congress offset this $108 million by $63 million of budget
execution savings, for a net $45-million increase in O&M funding. In
addition, the Appropriations Act reduces the total amount appropriated to
the Defense Health Program by $9.8 million to reflect savings from
favorable foreign currency fluctuations. DOD stated that these actions
underfund the O&M portion of the Defense Health Program by almost 
$73 million, and as a result will likely require additional funding.

We recently reported that there is risk to the sufficiency of the
projected annual funding levels for the Defense Health
Program./Footnote17/ Program officials told us that the beneficiary
population is largely undefined because neither military treatment
facilities nor managed care support contractors require enrollment for
most of the beneficiaries and that this is a major impediment to
submitting realistic Defense Health Program budget requests. DOD currently
relies on surveys to estimate how many beneficiaries use military
facilities and managed care and to what extent DOD is their primary or
secondary source of coverage. We estimated that at the end of 1998 less
than half of the 8.2 million DOD-eligible beneficiaries were enrolled in
the military health system. We and the Congressional Budget Office
concluded that for DOD to better estimate costs and efficiently manage the
Defense Health Program system, it needs a universal beneficiary enrollment
system to clearly identify the population for whom health care is to be
provided./Footnote18/ DOD's budgeting uncertainties in the Defense Health
Program stem, in large measure, from its lack of a universal beneficiary
enrollment requirement.

DOD May Need Additional O&M Funds for Ongoing Contingency Operations

Current estimated costs for fiscal year 2000 ongoing contingency
operations costs are likely to exceed $5 billion. The President's budget
for 2000 included $1.8 billion for ongoing Bosnia operations and $1.1
billion for Southwest Asia. Since there were no operations in Kosovo at
the time the 2000 budget was submitted, no funds were included for U.S.
involvement in Kosovo. DOD's current, but not finalized, estimate for the
cost of U.S. military participation in the Kosovo peace enforcement force
in 2000 is 
$2.5 billion.

We estimated that as much as $475 million provided for fiscal year 1999
contingency operations are in excess of 1999
costs./Footnote19/^,/Footnote20/ The excess is due primarily to the fact
that combat operations in Kosovo ended in June rather than continuing to
the end of the fiscal year as anticipated by DOD's supplemental
appropriations request and the funding provided by Congress. The majority
of these funds for fiscal year 1999 contingency operations have been
appropriated to the Overseas Contingency Operations Transfer Fund, which
are available until expended.

If DOD's $2.5 billion estimate for fiscal year 2000 U.S. participation in
Kosovo is correct, and DOD does have $475 million available from fiscal
year 1999 appropriations to apply to fiscal year 2000 costs, DOD will
still require over $2 billion in additional funds for its ongoing Kosovo
operations to pay for the costs not covered by the excess 1999 funds.
Also, DOD may need more funds for both Bosnia and Southwest Asia
operations than projected when the 2000 FYDP was finalized because the
Fiscal Year 2000 Defense Appropriations Act provides less for these
operations than proposed in the 2000 FYDP. Finally, DOD has programmed
only minimal amounts for new unexpected contingencies (less than $300
million in 
2002 and 2003), which will place a further burden on DOD's resources, if
additional funds are required during that period.

Even if Congress appropriates supplemental funds for the ongoing and
unexpected contingencies, Congress continues to debate whether rescissions
from other defense programs should be imposed to offset some or all of the
funding provided. If the funding is designated as an "emergency"
requirement, Congress can approve supplemental funds without offsetting
the amounts with rescissions in previously enacted discretionary
appropriations or mandatory spending programs. The controversy has been
that if Congress and the President agree to define the supplemental
appropriations as an emergency, discretionary spending rises beyond the
discretionary spending caps and the size of the budget surplus declines.
In 1993 through 1997, Congress offset some, but not all, of the emergency
supplemental appropriations./Footnote21/ In 1998, Congress provided DOD
with emergency appropriations without offsets. The two emergency
supplemental appropriations for 1999 provided DOD with $7.7 billion and
$10.7 billion, respectively, and required less than $100 million each in
offsets of DOD programs, but only after extensive debate and a threat of
presidential veto./Footnote22/ In the past, rescissions came from
inflation savings, fuel savings, and large unobligated budget authority,
but such savings from less contentious sources are not always possible
according to the Congressional Research Service. Since historically, DOD
has only programmed for and Congress has only appropriated for ongoing
contingency operations, the services generally have borrowed funds from
other activities that they planned to conduct later in the fiscal year to
pay for new or expanded contingencies. Although Congress has appropriated
supplemental funding to pay for the added costs of contingencies, DOD may
be required, as it has in the past, to reduce funding in the short term
for other programs through reprogramming and rescissions, adversely
impacting those programs such as readiness.

Planned Increase in Procurement Funding at Risk
-----------------------------------------------

DOD programmed $8 billion (3.5 percent) more in procurement funds over the
2001-2003 period in the 2000 FYDP than in the 1999 FYDP. About half of the
increase occurred in 2003 when the discretionary spending caps are
expected to end. DOD plans to add to the procurement of items in its
Quadrennial Defense Review modernization plan. For example, the 
2000 FYDP included an additional new attack submarine in the Navy's
shipbuilding plan and accelerated the rate of procurement of the Marine
Corps' tilt-rotor V-22 aircraft. Despite the net increase, procurement
funding for both the Army and defensewide components were projected to
decrease during the same period. Figure 4 compares total procurement
funding in the 2000 FYDP with annual procurement funding projections in
the 1999 FYDP.

Figure****Helvetica:x11****4:    Annual Procurement Funding Levels in the
                                 1999 and 2000 FYDPs (in billions of
                                 fiscal year 2000
                                 dollars)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: Our analysis of FYDP data.

In recent years, DOD has had difficulty in meeting its planned growth in
procurement funding. Although the 2000 FYDP projected that DOD will meet
the Quadrennial Defense Review's goal of $60 billion in procurement
funding by 2001, this plan follows the pattern of previous FYDPs by
putting most of the procurement funding increase in the outyears of the
FYDP. We have reported that DOD reduced programmed procurement in
successive FYDPs and reprogrammed some procurement to the years beyond the
FYDP./Footnote23/ The 2000 FYDP is no exception. The level of procurement
funding for 2000 was slightly reduced in the 2000 FYDP from the level
projected in the 1999 FYDP. In addition, procurement plans were either
canceled or reprogrammed to the outyears of the FYDP. For example, Army
officials stated that the Army terminated the Improved Recovery Vehicle
program and moved funding for the CH-47 cargo helicopter upgrades to the
outyears. The Army stated that funds originally slated for these programs
would be used to increase O&M funding for such activities as depot
maintenance, real property maintenance, and active component flying hours
for training. According to the Army, these cuts in procurement will
adversely affect future readiness because the Army will have to rely on
older, more maintenance intensive equipment. 

The Quadrennial Defense Review stated that as successive FYDPs reduced the
amount of programmed procurement, some of these reductions have
accumulated into long-term projections, creating a large demand for
procurement funds in the outyears. This movement of procurement funding to
the outyears is a source of risk to the long-term affordability of the
Department's modernization plans. The Quadrennial Defense Review stated
that to ensure that DOD meets and maintains its $60-billion minimum
funding level for procurement, DOD must stop the movement of funding
planned for procurement in the FYDP to other accounts and achieve the
overall funding increases it has programmed in its FYDPs to pay, in part,
for its modernization plans.

Family Housing Accounts May Require More Funding Than Programmed in the
2000 FYDP
---------------------------------------------------------------------------

DOD programmed less money in the 2000 FYDP for family housing due to
planned further implementation of the Military Housing Privatization
Initiative. The purpose of the Initiative is to encourage private sector
investment, rather than use government funding, to build and operate
housing on military installations or in nearby communities where local
markets could not meet military housing needs. The House Appropriations
Military Construction Subcommittee, though, was concerned with some of the
services' plans to move to greater use of the Initiative instead of using
the Initiative as a supplement to traditional military housing
construction financing, which funds the construction and operation of
military housing solely through DOD funding. As a result, the Army and the
Navy scaled back their privatization plans and stated that the 2001 FYDP
will show higher projected funding levels in the family housing
construction and operations appropriation accounts.

Funding for family housing operations and construction activities was
projected to be lower in the 2000 FYDP than in the 1999 FYDP over the 2000-
2003 period, as shown in figure 5. Total funding for this period is
projected to be about $1.1 billion less in the 2000 FYDP.

Figure****Helvetica:x11****5:    Annual Family Housing Funding Levels in
                                 the 1999 and 2000 FYDPs (in billions of
                                 constant fiscal year 2000
                                 dollars)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: Our analysis of FYDP data.

Over the past several years, DOD had expressed concern over the poor
condition of military family housing. To more quickly and economically
remedy the housing problems, the Fiscal Year 1996 National Defense
Authorization Act gave DOD the authority to test a new initiative, known
as the DOD's Military Housing Privatization Initiative./Footnote24/ DOD's
goal was to reduce the government's near-term outlays for housing
revitalization by encouraging the private sector to invest at least $3 in
military housing development for each dollar that the government invested.
By leveraging government funds by a minimum of 3 to 1, the military can
stretch its available construction funds so that significantly more
housing can be revitalized in comparison to traditional military housing
financing. Under the Initiative, funds can be moved from military housing
construction and operations accounts to military housing allowance
accounts for use by military personnel for rent payments.

Progress in implementing the Initiative has been slow. Currently, DOD has
only privatized 3,083 housing units under the Initiative although it had
expected to privatize 15,000 units by 1999 according to the Defense Reform
Initiative. DOD took steps in the 2000 FYDP to speed implementation of the
program. When the 2000 FYDP was developed, DOD identified 7 privatization
projects for 2000, that would improve or build an additional 10,500 units
and moved funding from family housing appropriations to military personnel
appropriations, reducing the level of annual family housing appropriations
in the 2000 FYDP.

In June 1999, the House Appropriations Military Construction Subcommittee
expressed concern that some of the services were not using the Initiative
as intended by the legislation, which was to use the Initiative to
supplement traditional military housing construction financing. The Army
and the Navy planned aggressive use of the Initiative to reduce their
housing deficiencies. The Army's fiscal year 2000 program did not include
any conventional military family housing construction funding for
installations within the United States. The Navy's fiscal year 2000 plan
did not build any new family housing units within the continental United
States during that fiscal year. Given the extent of the housing problems,
and the slow pace of execution under the Initiative, the Subcommittee did
not believe that the Army's and the Navy's aggressive use of the
Initiative was appropriate. The Subcommittee stated that no further
privatization approval would be forthcoming and that approved projects
should be thoroughly reviewed by DOD. As a result of these concerns, DOD
revised the privatization plans to include only five projects in 2000, not
seven. Based on the revised plan, some funds will shift back to the family
housing construction and operation accounts from the military housing
allowance accounts in the 2001 FYDP. 

We have also questioned how much DOD saves per unit by constructing family
housing under the Initiative./Footnote25/ In our review of two
privatization projects, we found that the difference in the cost of
privatization and traditional military construction financing was about 10
percent or less, considerably lower than the services' estimates. Also,
according to DOD, some projects under the Initiative may require more
funding than originally projected.

DOD Unable to Shift Funds to Modernization and Readiness Through
Infrastructure Reductions
---------------------------------------------------------------------------

Despite DOD's continued emphasis to reduce its infrastructure to free up
funds for its priorities, most notably modernization and readiness, our
analysis found almost no reduction in the proportion of resources
allocated to infrastructure in the 2000 FYDP from the allocation in the
1999 FYDP./Footnote26/ Total funding for infrastructure and mission
programs increased in the 
2000 FYDP, with over two-thirds of the increase provided to mission
programs, resulting in almost no change to the overall proportion of
mission and infrastructure in the total DOD program. In addition, DOD may
not be able to reduce its infrastructure using two of its major
infrastructure reduction initiatives-competitive sourcing and base
realignment and closure. Our work to date has shown that although DOD has
achieved some savings through competitive sourcing, savings are
overestimated, at least in the short term, and it has taken longer to
begin and complete the competitions than originally planned./Footnote27/
Also, the National Defense Authorization Act for Fiscal Year 2000
contained no authorization for either of the two additional rounds of base
closures DOD requested and included in the 2000 FYDP. Therefore, DOD will
have less infrastructure savings available than planned in the 2000 FYDP
to fund its priorities.

The Quadrennial Defense Review concluded that the downsizing of DOD's
infrastructure had fallen behind the downsizing of its force structure,
and DOD could not afford to waste resources on an infrastructure "stuck in
the past." The Secretary of Defense stated that despite the additional
funding in DOD's 2000 budget, DOD still needs to reduce excess support
activities and infrastructure that continue to take resources away from
readiness, modernization, and the quality of life of DOD's personnel.
Despite this emphasis on reducing DOD's infrastructure to free up
resources for DOD's most pressing requirements, our reviews of DOD's 1996-
2000 FYDPs have shown that DOD has not made any significant reductions in
the proportion of resources allocated to infrastructure.

The portion of DOD's 2000 FYDP allocated to its direct infrastructure
during the 2000-2001 period remained at about the same level as DOD
projected its level of infrastructure funding in the 1999
FYDP./Footnote28/ DOD projected only about 1 percent decline in the
portion of resources allocated to infrastructure in 2002 and 2003 compared
to the portion allocated to infrastructure in the 1999 FYDP, as shown in
figure 6. In addition to this direct infrastructure, there are parts of
the total infrastructure funding that cannot be clearly identified in the
FYDP. These funds pay for goods and services sold by the four Defense
Working Capital Funds and mostly represent logistics
purchases./Footnote29/ In the past, DOD estimated that this "indirect"
infrastructure was on average an additional 14 percent of its total program.

Figure****Helvetica:x11****6:    Mission and Direct Infrastructure
                                 Programs in 1999 and 2000
                                 FYDPs
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: Our analysis of FYDP data.

DOD projected increases in funding for both its mission and infrastructure
programs in the 2000 FYDP. Over two-thirds of the annual increases in the
2000 FYDP were for mission programs, and the remainder of the increases
was for direct infrastructure, which had almost no impact on the overall
proportion of mission to infrastructure in the total DOD program. Most of
the increase in mission program funding was due to changing the
designation of programs from infrastructure to mission, specifically
direct support forces. For example, the Air Force personnel and funds in
base operations and medical functions that have wartime missions were
redesignated from infrastructure to combat support programs. Similarly,
according to the Army, it moved considerable funding and personnel
resources from central personnel and training programs (infrastructure
programs) into direct support forces programs.

Several infrastructure categories were projected to have funding increases
over the 2000-2003 period. For example, central training infrastructure
funding was projected to increase between 8 and 10 percent each year over
the 2001-2003 period in the 2000 FYDP from the levels projected in the
1999 FYDP./Footnote30/ This increase was not surprising because we
recently found that the Army, the Navy, and the Air Force may not have
been able to accomplish their training programs at the reduced annual
funding levels in the 1999 FYDP./Footnote31/ Service officials agreed and
told us that some training categories were underfunded and may require
higher funding levels in the 2000 FYDP. For example, since the services
were experiencing lower-than-expected retention rates for enlisted
personnel, future training requirements would increase to replace the
personnel not retained. However, all of the services projected that the
number of personnel to be trained would be reduced, resulting in lower
levels of training funding in the 1999 FYDP.

DOD continued to emphasize the reduction of unneeded support activities
and infrastructure and its goal of having infrastructure consume a smaller
portion of the defense budget through ongoing and proposed initiatives.
DOD planned to use the savings to offset current funding shortfalls in
modernization and quality of life initiatives. Its major initiative to
reduce infrastructure is the ongoing Defense Reform Initiative, which
included the proposed 2001 and 2005 rounds of base realignment and
closures. The 
2000 FYDP included savings and costs from these initiatives.

DOD May Not Achieve All of the Savings Programmed in the 2000 FYDP From
Competitive Sourcing Initiatives

The 1999 FYDP was the first to reflect savings from DOD's Defense Reform
Initiative. The intention of the Initiative was to change how DOD does
business internally and with the private sector. The Initiative has four
basic tenets: (1) reduce excess infrastructure and redundancies, (2) adopt
modern business practices to achieve world class standards of performance
and continue to reform the acquisition process, (3) streamline
organizations to remove redundancies and maximize synergy, and 
(4) expand the use of competition between the public and private sectors
to improve performance and reduce the cost of DOD business and support
activities. Quantifiable long-term savings, to pay for future
modernization have been estimated for only two initiatives: public/private
competitions (competitive sourcing) and base realignment and closures.

DOD estimated that competitive sourcing will save about $11.2 billion over
the 1997 through 2005 period and $3.4 billion each year
thereafter./Footnote32/ Under competitive sourcing, a federal agency
identifies the work to be performed; and prepares an in-house cost
estimate, based on its most efficient organization; and compares it with
the best offer from the private sector to determine which entity can
perform the work more cost-effectively. For example, the Army's program
reflected anticipated savings of $3.1 billion from competitions over the
2000-2005 period. The Army expected that all of its competitive sourcing
studies, which would determine whether it is less expensive to have in-
house organizations or private contractors perform certain functions, will
be completed by 2005 and that subsequent decisions will achieve "steady-
state" savings of about $800 million per year. All of its projected
savings in the 2000 FYDP were reprogrammed to pay for other Army high
priority programs.

DOD's past competitive sourcing efforts for various activities yielded
some savings. However, because these efforts achieved lower savings than
anticipated, we see risk in that DOD may not achieve all of the savings
programmed in the 2000 FYDP for several reasons./Footnote33/ First, DOD
has established far greater and more aggressive goals for competitions
than in the past. Second, our recent work concluded that the savings
estimates provided to Congress from the use of competitive sourcing are
overstated at least in the short term because DOD has not fully determined
the up-front investment costs required to perform the competitive sourcing
studies or the personnel separation costs likely to be associated with
implementing the studies. Third, Defense components have fallen behind in
beginning and completing many of the initial studies. DOD officials have
raised concerns about the number of positions that can be reasonably
studied during the prescribed time frame and the likelihood that the
projected savings can be realized.

Congress Did Not Approve Additional Base Realignment And Closure Rounds

To enable DOD to close unneeded bases, Congress enacted base closure
legislation that instituted base closure rounds in 1988, 1991, 1993, and
1995. The 2000 FYDP, like the 1999 FYDP, requested congressional approval
for two more rounds of base realignment and closure (referred to as base
closures) in 2001 and 2005. Both FYDPs included approximately 
$790 million in 2002 and $1.3 billion in 2003 to begin implementation of a
2001 base closure round. The 2000 program also contained $525 million in
base closure funding in 2004. DOD estimated that initial net savings from
a 2001 base closure round would occur in 2005 and showed $162 million in
savings for that year in the 2000 program. In total, DOD estimated that
the two base closure rounds would yield savings of over $20 billion over
the 2008-2015 period and $3 billion annually thereafter./Footnote34/ DOD
continued to emphasize that it needs two more base closure rounds to
reduce excess base capacity and to free up additional funds for readiness,
weapon modernization, and quality of life plans. DOD stated that although
force structure has been reduced by 36 percent, base capacity has only
been reduced by 26 percent through the four previous base closure rounds. 

Congress did not authorize new base closure rounds. Many Members of
Congress have been reluctant to support additional base closure rounds
because they were concerned about the costs and savings from prior base
closure rounds, their economic impact, and executive branch implementation
of the 1995 base closure commission's recommendations regarding McClelland
and Kelly Air Force bases in California and Texas, respectively. In May
1999, the Senate rejected a proposed amendment to the National Defense
Authorization for Fiscal Year 2000 bill to establish another base closure
round in 2001. Thus, DOD will need to make some changes to the 2000
program, especially in 2005 when DOD expects the first net savings to
appear. Also, until additional rounds are approved, DOD will have the net
cost of these rounds to reallocate to other programs. DOD stated that
without base closure authority, it will need to continue spending scarce
funds on maintaining excess infrastructure, and identify other funding
sources to meet these needs, including modernization.

Most Savings From Base Closings and Other Initiatives Come From Lower
Civilian Personnel Employment Levels
---------------------------------------------------------------------------

The personnel levels in the 1999 FYDP reflected the Quadrennial Defense
Review's recommendations-reductions in military personnel and civilians.
In the 2000 FYDP, DOD continued to project a decline in military personnel
levels will decline, but the decline was about 2,000 people less than
projected in the 1999 FYDP, as shown in figure 7.

Figure****Helvetica:x11****7:    Military Personnel Levels in the 1999 and
                                 2000 FYDPs (military personnel in
                                 thousands)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: DOD FYDP data.

Figure 8 shows that the number of civilian personnel continues to decline,
but DOD now projected over 20,000 fewer civilians in 2003 in the 
2000 FYDP than projected in the 1999 FYDP. Programmed lower levels of
civilian personnel employment provided most of the eventual savings from
base closings and other initiatives.

Figure****Helvetica:x11****8:    Civilian Personnel Levels in the 1999 and
                                 2000 FYDPs (civilian personnel in
                                 thousands)
*****************
<Graphic --
                                 Download the PDF file to
                                 view.>
*****************

Source: DOD FYDP data.

The ability of DOD to make such significant reductions in civilian
personnel levels will depend on whether DOD receives authority for a 
2001 base closure round, if competitive sourcing and other Defense Reform
Initiative projects are completed on time, and if the timing and estimates
of the savings are accurate. For example, the Navy projected almost 
13,370 fewer civilians in 2003 as competitive sourcing is implemented. The
Air Force was the only service that projected that its civilian personnel
levels would be higher in the 2000 FYDP than in the 1999 FYDP over the
2001-2003 period, although the annual levels in the 2000 FYDP were
projected to be lower in 2003 than in 2000. According to the Air Force,
these increases resulted from more refined estimates of reductions in
civilian personnel requirements from implementing competitive sourcing. As
mentioned previously, the services' ability to achieve these reductions
when planned is questionable since several services have fallen behind in
beginning and completing the initial competitive sourcing studies.

Agency Comments

In written comments on a draft of this report, DOD provided technical
comments, which we included in the report where appropriate. DOD's
comments are reprinted in their entirety in appendix II.

Scope and Methodology

To determine the major program adjustments in DOD's defense plan, we
analyzed funding data from the 1999 and 2000 FYDPs for fiscal years 
2000-2003. We adjusted the current dollars to constant 2000 dollars using
appropriate DOD Comptroller inflation indexes. We did not test DOD's
management controls of the FYDP data or verify the data contained in
either the 1999 or the 2000 FYDPs. However, we compared DOD's automated
FYDP data with published documents DOD provided. Specifically, we compared
total budget estimates, appropriation totals, military and civilian
personnel levels, force structure levels, and some specific program
information. Based on our comparisons, we were satisfied that the
automated FYDP data and published data were in agreement.

To identify risks in the 2000 FYDP and determine how DOD will achieve
savings programmed in that FYDP, we interviewed program and budget
officials in the Office of the Secretary of Defense, Army, Navy, and Air
Force Headquarters. We also examined various DOD planning and budget
documents, including the 1999 Report of the Secretary of Defense to the
President and the Congress, Programming and Budget Decisions for the 2000
budget, the President's fiscal years 1999 and 2000 budget submissions, the
Mid-Session Review for the 2000 budget, Selected Acquisition Reports, the
Report of the Quadrennial Defense Review, and the Defense Reform
Initiative Report. We also reviewed congressional testimonies of various
DOD officials to support the 1999 and 2000 budget submissions; our prior
reports; and pertinent reports by the Congressional Budget Office, the
Congressional Research Service, and others. In addition, we provided each
services and the Office of the Secretary of Defense (Program Analysis and
Evaluation) with questions about the changes between the two FYDPs. We
included their responses throughout the report as appropriate.

Our review was conducted from April through October 1999 in accordance
with generally accepted government auditing standards.

We are sending copies of this report to other appropriate congressional
committees; the Honorable William Cohen, Secretary of Defense; the
Honorable F. Whitten Peters, Secretary of the Air Force; the Honorable
Louis Caldera, Secretary of the Army; and the Honorable Richard Danzig,
Secretary of the Navy. We will also provide copies to others upon request.

If you have any questions concerning this report, please call Robert
Pelletier on (202) 512-4032. Key contributors to this report were Edna
Thea Falk, Gaines R. Hensley, Patricia Lentini, and Dale Wineholt.

Sincerely yours,
*****************
<Graphic -- Download the PDF file to
view.>
*****************

Norman J. Rabkin
Director, National Security
Preparedness

--------------------------------------
/Footnote1/-^Unless otherwise stated, the years and dollars shown in this
  report are on a fiscal year basis and in constant fiscal year 2000
  dollars.
/Footnote2/-^October 21, 1998), and the second 1999 emergency supplemental
  appropriation was provided in the 1999 Emergency Supplemental
  Appropriations Act (P.L. 106-31, May 21, 1999). The second emergency
  supplemental provided DOD with $10.7 billion for such items as overseas
  contingency operations, spare parts, depot maintenance, and military pay
  and retirement.
/Footnote3/-^DOD has requested congressional approval to use $1.65 billion
  for other purposes.
/Footnote4/-^Each year, the Office of Management and Budget provides DOD
  with guidance to use in preparing DOD's budget request and FYDP. The
  guidance includes the executive branch's assumptions for inflation. DOD
  uses these assumptions to reestimate the cost of its programs. As a
  result of lower projected inflation rates over the last few years, DOD
  has projected inflation savings and has been authorized to retain most
  of these projected savings. This year, the President directed DOD to
  retain the projected savings from the 1999 FYDP to the 2000 FYDP and
  allocate them to the Department's most pressing needs.
/Footnote5/-^Future Years Defense Program: Substantial Risks Remain in
  DOD's 1999-2003 Plan (GAO/NSIAD-98-204, July 31, 1998).
/Footnote6/-^Competitive sourcing is a process by which DOD and other
  federal agencies conduct cost comparisons to determine whether the
  public or private sector can perform selected activities and functions
  more cheaply.
/Footnote7/-^The National Defense Authorization Act for Fiscal Year 2000,
  P.L. 106-65, October 5, 1999.
/Footnote8/-^Evaluating CBO's Record of Economic Forecasts, Congressional
  Budget Office, July 30, 1999.
/Footnote9/-^An advance appropriation is budget authority provided in an
  appropriation act that is first available in a fiscal year beyond the
  fiscal year for which the appropriation act is enacted.
/Footnote10/-^1997 Budget Enforcement Act-Title X of P.L. 105-33, Aug. 5,
  1997.
/Footnote11/-^P.L. 106-52, Aug. 17, 1999.
/Footnote12/-^P.L. 106-79, Oct. 25, 1999.
/Footnote13/-^The Employment Cost Index is a measure of overall
  compensation trends in the economy.
/Footnote14/-^Military Retirement Reform Act of 1986-P.L. 99-348, July 1,
  1986.
/Footnote15/-^As noted earlier, the values in our report reflect only that
  portion of the first 1999 supplemental appropriation that has been
  declared "emergency" and released by the Office of Management and Budget
  prior to the 2000 budget submission in February 1999, and do not reflect
  the additional 1999 and 2000 resources provided to DOD in the second
  1999 emergency supplemental appropriation because it was not reflected
  in the President's budget and FYDP.
/Footnote16/-^P.L. 104-208, September 30, 1996.
/Footnote17/-^Defense Health Program: Reporting of Funding Adjustments
  Would Assist Congressional Oversight (GAO/HEHS-99-79, April 29, 1999).
/Footnote18/-^Restructuring Military Medical Care, July 1995,
  Congressional Budget Office.
/Footnote19/-^Military Operations: Some Funds for Fiscal Year 1999
  Contingency Operations Will Be Available for Future Needs (GAO/NSIAD-99-
  244BR, Sept. 21, 1999).
/Footnote20/-^The contingency funding values for 1999 are in current
  dollars.
/Footnote21/-^Emergency Appropriations for the Department of Defense,
  Congressional Research Service memorandum, Aug. 18, 1998.
/Footnote22/-^Appropriations Supplemental for FY1999: Emergency Funding in
  P.L. 105-277 for Agriculture, Embassy Security, Y2K Problems, Defense,
  and Other Issues, Congressional Research Service Report for Congress, RL
  30056, Feb. 25, 1999 and Supplemental Appropriations for FY1999: Central
  America Disaster Aid, Middle East Peace, and Other Initiatives,
  Congressional Research Service Report for Congress, RL30083, May 26, 1999.
/Footnote23/-^Future Years Defense Program: Substantial Risks Remain in
  DOD's 1999-2003 Plan and DOD Budget: Substantial Risk in Weapons
  Modernization Plans (GAO/T-NSIAD-99-20, Oct. 8, 1998).
/Footnote24/-^P.L. 104-106, Feb. 10, 1996.
/Footnote25/-^Military Housing: Privatization Off to a Slow Start and
  Continued Management Attention Needed (GAO/NSIAD-98-178, July 17, 1998).
/Footnote26/-^DOD defines infrastructure as those activities that provide
  support services to mission programs, such as combat forces, and
  primarily operate from fixed locations.
/Footnote27/-^Defense Outsourcing: Challenges Facing DOD as It Attempts to
  Save Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, March 12,
  1997) and Defense Reform Initiative: Organization, Status, and
  Challenges (GAO/NSIAD-99-87, April 21, 1999).
/Footnote28/-^Using the FYDP, DOD has clearly identified program elements
  that fund infrastructure activities and refer to these as "direct
  infrastructure."
/Footnote29/-^The Defense Working Capital Funds are revolving funds, which
  support self-sustaining activities in DOD that sell a product or service
  to DOD customers and then use the receipts from sales to pay operating
  expenses and purchase new stock. There is a Working Capital Fund for
  each service and defensewide to devolve the responsibility for cash
  balances to each DOD component.
/Footnote30/-^Central training programs include individual training
  activities that provide training for active military personnel, reserve
  component personnel, and DOD civilians.
/Footnote31/-^Defense Infrastructure: Funding Risks in Services' 1999
  Central Training Programs (GAO/NSIAD-99-56, Feb. 24, 1999).
/Footnote32/-^These values are in current dollars.
/Footnote33/-^Defense Reform Initiative (GAO/NSIAD-99-87, Apr. 21, 1999).
/Footnote34/-^These values are in current dollars.

DEPARTMENT OF DEFENSE'S 1999 AND 2000 FUTURE YEARS DEFENSE PROGRAMS BY
ACCOUNT
===========================================================================

The following tables show the differences between accounts in the 1999 and
2000 Future Years Defense Programs (FYDP) for each appropriation over the
years common to the two programs, 2000-2003.

Table****Helvetica:x11****3:    Military Personnel Appropriation Accounts,
                                1999 and 2000 FYDPs (total obligational
                                authority in millions of fiscal year 2000
                                dollars)

(Continued from Previous Page)
----------------------------------------------------------------------------
| Appropriation   : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category        :       :       :       :       :       :       :    nt  |
|                 :       :       :       :       :       :       : chang  |
|                 :       :       :       :       :       :       :     e  |
|                 :       :       :       :       :       :       : 2000-  |
|                 :       :       :       :       :       :       :  2003  |
|--------------------------------------------------------------------------|
| Military        : 1999  : $21,1 : $21,0 : $21,0 : $21,0 : $84,2 :        |
| personnel, Army :       :    02 :    08 :    40 :    98 :    48 :        |
|--------------------------------------------------------------------------|
|                 : 2000  : 22,007: 21,957: 21,906: 21,920: 87,790:        |
|--------------------------------------------------------------------------|
|                 : Change:   904 :   949 :   866 :   822 : 3,542 :   4.2  |
|--------------------------------------------------------------------------|
| Military        : 1999  : 16,721: 16,491: 16,453: 16,458: 66,123:        |
| personnel, Navy :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                 : 2000  : 17,207: 17,311: 17,323: 17,295: 69,137:        |
|--------------------------------------------------------------------------|
|                 : Change:   487 :   820 :   870 :   837 : 3,014 :   4.6  |
|--------------------------------------------------------------------------|
| Military        : 1999  : 6,533 : 6,520 : 6,498 : 6,478 : 26,030:        |
| personnel,      :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Marine Corps    : 2000  : 6,545 : 6,619 : 6,618 : 6,611 : 26,394:        |
|--------------------------------------------------------------------------|
|                 : Change:    12 :    99 :   120 :   133 :   364 :   1.4  |
|--------------------------------------------------------------------------|
| Military        : 1999  : 17,621: 17,068: 16,645: 16,430: 67,763:        |
| personnel,      :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Air Force       : 2000  : 17,900: 17,787: 17,498: 17,351: 70,537:        |
|--------------------------------------------------------------------------|
|                 : Change:   279 :   720 :   853 :   922 : 2,773 :   4.1  |
|--------------------------------------------------------------------------|
| Reserve         : 1999  : 2,199 : 2,173 : 2,106 : 2,111 : 8,590 :        |
| personnel, Army :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                 : 2000  : 2,271 : 2,290 : 2,267 : 2,300 : 9,129 :        |
|--------------------------------------------------------------------------|
|                 : Change:    72 :   117 :   161 :   189 :   539 :   6.3  |
|--------------------------------------------------------------------------|
| Reserve         : 1999  :       :       :       :       :     0 :        |
| component       :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| personnel, Army : 2000  :       :   -29 :   -92 :  -137 :  -259 :        |
|--------------------------------------------------------------------------|
|                 : Change:     0 :   -29 :   -92 :  -137 :  -259 :        |
|--------------------------------------------------------------------------|
| Reserve         : 1999  : 1,405 : 1,385 : 1,369 : 1,364 : 5,522 :        |
| personnel, Navy :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                 : 2000  : 1,446 : 1,429 : 1,422 : 1,416 : 5,713 :        |

|--------------------------------------------------------------------------|
|                 : Change:    42 :    45 :    53 :    52 :   191 :   3.5  |
|--------------------------------------------------------------------------|
| Reserve         : 1999  :   410 :   395 :   383 :   375 : 1,563 :        |
| personnel,      :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Marine Corps    : 2000  :   409 :   410 :   407 :   398 : 1,624 :        |
|--------------------------------------------------------------------------|
|                 : Change:     0 :    14 :    25 :    22 :    61 :   3.9  |
|--------------------------------------------------------------------------|
| Reserve         : 1999  :   906 :   903 :   901 :   900 : 3,610 :        |
| personnel,      :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Air Force       : 2000  :   881 :   910 :   908 :   904 : 3,604 :        |
|--------------------------------------------------------------------------|
|                 : Change:   -25 :     7 :     7 :     5 :    -6 :  -0.2  |
|--------------------------------------------------------------------------|
| National Guard  : 1999  : 3,399 : 3,296 : 3,216 : 3,179 : 13,091:        |
| personnel,      :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Army            : 2000  : 3,571 : 3,588 : 3,600 : 3,634 : 14,393:        |
|--------------------------------------------------------------------------|
|                 : Change:   171 :   291 :   384 :   455 : 1,301 :   9.9  |
|--------------------------------------------------------------------------|
| National Guard  : 1999  : 1,423 : 1,417 : 1,419 : 1,422 : 5,681 :        |
| personnel,      :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Air Force       : 2000  : 1,487 : 1,502 : 1,504 : 1,507 : 5,999 :        |
|--------------------------------------------------------------------------|
|                 : Change:   $64 :   $85 :   $85 :   $85 :  $319 :   5.6  |
|--------------------------------------------------------------------------|
| Total           : 1999  : $71,7 : $70,6 : $70,0 : $69,8 : $282, :        |
|                 :       :    19 :    57 :    30 :    15 :   221 :        |
|--------------------------------------------------------------------------|
|                 : 2000  : $73,7 : $73,7 : $73,3 : $73,1 : $294, :        |
|                 :       :    23 :    75 :    63 :    99 :   060 :        |
|--------------------------------------------------------------------------|
|                 : Change: $2,004: $3,118: $3,332: $3,384: $11,8 :   4.2  |
|                 :       :       :       :       :       :    39 :        |
----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****4:    Operation and Maintenance Appropriation
                                Accounts, 1999 and 2000 FYDPs (total
                                obligational authority in millions of
                                fiscal year 2000 dollars)

(Continued from Previous Page)
---------------------------------------------------------------------------
| Appropriation  : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category       :       :       :       :       :       :       :    nt  |
|                :       :       :       :       :       :       : chang  |
|                :       :       :       :       :       :       :     e  |
|                :       :       :       :       :       :       : 2000-  |
|                :       :       :       :       :       :       :  2003  |
|-------------------------------------------------------------------------|
| Operation and  : 1999  : $17,2 : $17,2 : $17,3 : $17,1 : $68,9 :        |
|                :       :    96 :    12 :    16 :    11 :    35 :        |
|-------------------------------------------------------------------------|
| maintenance    : 2000  : 18,661: 18,690: 19,038: 19,006: 75,396:        |
| (O&M),         :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| Army           : Change: 1,365 : 1,478 : 1,723 : 1,895 : 6,460 :   9.4  |
|-------------------------------------------------------------------------|
| O&M, Navy      : 1999  : 21,413: 20,778: 20,558: 20,566: 83,315:        |
|-------------------------------------------------------------------------|
|                : 2000  : 22,239: 21,799: 21,503: 21,506: 87,047:        |
|-------------------------------------------------------------------------|
|                : Change:   825 : 1,021 :   944 :   940 : 3,731 :   4.5  |
|-------------------------------------------------------------------------|
| O&M, Marine    : 1999  : 2,533 : 2,477 : 2,491 : 2,528 : 10,030:        |
| Corps          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  : 2,559 : 2,623 : 2,575 : 2,539 : 10,297:        |
|-------------------------------------------------------------------------|
|                : Change:    26 :   146 :    84 :    11 :   267 :   2.7  |
|-------------------------------------------------------------------------|
| O&M, Air Force : 1999  : 20,150: 20,833: 20,660: 20,864: 82,507:        |
|-------------------------------------------------------------------------|
|                : 2000  : 20,363: 21,337: 21,248: 21,598: 84,547:        |
|-------------------------------------------------------------------------|
|                : Change:   213 :   504 :   589 :   735 : 2,040 :   2.5  |
|-------------------------------------------------------------------------|
| O&M,           : 1999  : 10,528: 10,511: 10,518: 10,526: 42,082:        |
| defensewide    :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  : 11,419: 11,119: 11,072: 11,024: 44,634:        |
|-------------------------------------------------------------------------|
|                : Change:   892 :   608 :   554 :   498 : 2,552 :   6.1  |
|-------------------------------------------------------------------------|
| O&M, Army      : 1999  : 1,227 : 1,191 : 1,214 : 1,208 : 4,840 :        |
| Reserve        :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  : 1,369 : 1,442 : 1,491 : 1,497 : 5,799 :        |
|-------------------------------------------------------------------------|
|                : Change:   142 :   252 :   277 :   289 :   959 :  19.8  |
|-------------------------------------------------------------------------|
| O&M, Army      : 1999  :       :       :       :       :     0 :        |
| Reserve        :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| Component      : 2000  :       :   -17 :   -49 :   -66 :  -132 :        |
|-------------------------------------------------------------------------|
|                : Change:     0 :   -17 :   -49 :   -66 :  -132 :        |
|-------------------------------------------------------------------------|
| O&M, Navy      : 1999  :   928 :   872 :   994 :   830 : 3,624 :        |
| Reserve        :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  :   918 :   865 :   893 :   971 : 3,648 :        |
|-------------------------------------------------------------------------|
|                : Change:   -10 :    -7 :  -100 :   141 :    23 :   0.6  |
|-------------------------------------------------------------------------|
| O&M, Marine    : 1999  :   112 :   103 :   102 :   101 :   418 :        |
| Corps          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| Reserve        : 2000  :   123 :   126 :   124 :   124 :   498 :        |
|-------------------------------------------------------------------------|
|                : Change:    11 :    23 :    22 :    23 :    80 :  19.0  |
|-------------------------------------------------------------------------|
| O&M, Air Force : 1999  : 1,649 : 1,634 : 1,637 : 1,641 : 6,560 :        |
|-------------------------------------------------------------------------|
| Reserve        : 2000  : 1,728 : 1,737 : 1,756 : 1,768 : 6,990 :        |
|-------------------------------------------------------------------------|
|                : Change:    80 :   103 :   119 :   127 :   430 :   6.6  |
|-------------------------------------------------------------------------|
| O&M, Army      : 1999  : 2,356 : 2,366 : 2,369 : 2,421 : 9,512 :        |
| National       :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| Guard          : 2000  : 2,904 : 2,962 : 3,005 : 3,021 : 11,892:        |
|-------------------------------------------------------------------------|
|                : Change:  $547 :  $596 :  $637 :  $600 : $2,380:  25.0  |
|-------------------------------------------------------------------------|
| O&M, Air       : 1999  : $3,031: $3,006: $3,035: $3,032: $12,1 :        |
| National       :       :       :       :       :       :    03 :        |
|-------------------------------------------------------------------------|
| Guard          : 2000  : 3,100 : 3,165 : 3,167 : 3,153 : 12,584:        |
|-------------------------------------------------------------------------|
|                : Change:    69 :   159 :   132 :   121 :   481 :   4.0  |
|-------------------------------------------------------------------------|
| Environmental  : 1999  :   379 :   376 :   375 :   375 : 1,505 :        |
|-------------------------------------------------------------------------|
| restoration    : 2000  :   378 :   373 :   333 :   332 : 1,416 :        |
| fund, Army     :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : Change:    -1 :    -4 :   -42 :   -42 :   -88 :  -5.9  |
|-------------------------------------------------------------------------|
| Environmental  : 1999  :   295 :   291 :   374 :   316 : 1,275 :        |
|-------------------------------------------------------------------------|
| restoration    : 2000  :   284 :   288 :   269 :   244 : 1,084 :        |
| fund, Navy     :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : Change:   -11 :    -2 :  -105 :   -72 :  -191 : -14.9  |
|-------------------------------------------------------------------------|
| Environmental  : 1999  :   381 :   379 :   377 :   375 : 1,512 :        |
|-------------------------------------------------------------------------|
| restoration    : 2000  :   377 :   369 :   367 :   364 : 1,477 :        |
| fund,          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| Air Force      : Change:    -4 :    -9 :   -10 :   -12 :   -36 :  -2.4  |
|-------------------------------------------------------------------------|
| Environmental  : 1999  :    25 :    23 :    23 :    22 :    93 :        |
|-------------------------------------------------------------------------|
| restoration    : 2000  :    25 :    23 :    22 :    22 :    92 :        |
| fund,          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| defensewide    : Change:     0 :     0 :     0 :     0 :    -1 :  -0.8  |
|-------------------------------------------------------------------------|
| Environmental  : 1999  :   298 :   184 :   184 :   182 :   848 :        |
|-------------------------------------------------------------------------|
| restoration    : 2000  :   199 :   183 :   182 :   180 :   743 :        |
| fund,          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| formerly used  : Change:   -99 :    -1 :    -2 :    -2 :  -105 : -12.4  |
| sites          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| Drug           : 1999  :   702 :   701 :   694 :   690 : 2,788 :        |
| interdiction   :       :       :       :       :       :       :        |
| and            :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| counterdrug    : 2000  :   788 :   749 :   737 :   726 : 3,001 :        |
| activities,    :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| defense        : Change:    86 :    48 :    43 :    36 :   213 :   7.6  |
|-------------------------------------------------------------------------|
| Defense        : 1999  : 10,302: 10,554: 10,427: 10,347: 41,629:        |
| Health Program :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  : 10,835: 10,973: 10,713: 10,523: 43,043:        |
|-------------------------------------------------------------------------|
|                : Change:   533 :   419 :   286 :   176 : 1,414 :   3.4  |
|-------------------------------------------------------------------------|
| Former Soviet  : 1999  :   444 :   450 :   241 :   413 : 1,549 :        |
| Union          :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| threat         : 2000  :   476 :   488 :   429 :   466 : 1,857 :        |
| reduction      :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : Change:    31 :    38 :   188 :    52 :   309 :  19.9  |
|-------------------------------------------------------------------------|
| Overseas       : 1999  :   148 :   145 :   142 :   138 :   573 :        |
| contingency    :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| operations     : 2000  : 2,388 : 1,261 :   280 :   273 : 4,202 :        |
| transfer fund  :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : Change: 2,240 : 1,116 :   139 :   135 : 3,629 : 633.5  |
|-------------------------------------------------------------------------|
| Other O&M      : 1999  :   196 :   190 :   190 :   191 :   767 :        |
|-------------------------------------------------------------------------|
|                : 2000  : 2,134 :   213 :   214 :   213 : 2,774 :        |
|-------------------------------------------------------------------------|
|                : Change: 1,937 :    24 :    24 :    23 : 2,008 : 261.8  |
|-------------------------------------------------------------------------|
| Total          : 1999  : $94,3 : $94,2 : $93,9 : $93,8 : $376, :        |
|                :       :    95 :    74 :    18 :    77 :   464 :        |
|-------------------------------------------------------------------------|
|                : 2000  : $103, : $100, : $99,3 : $99,4 : $402, :        |
|                :       :   266 :   769 :    69 :    84 :   888 :        |
|-------------------------------------------------------------------------|
|                : Change: $8,870: $6,495: $5,451: $5,607: $26,4 :   7.0  |
|                :       :       :       :       :       :    24 :        |
---------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****5:    Procurement Appropriation Category by
                                Component, 1999 and 2000 FYDPs (total
                                obligational authority in millions of
                                fiscal year 2000 dollars)

----------------------------------------------------------------------------
| Appropriation  : FYDP  :   2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category       :       :        :       :       :       :       :    nt  |
|                :       :        :       :       :       :       : change |
|                :       :        :       :       :       :       : 2000-  |
|                :       :        :       :       :       :       :  2003  |
|--------------------------------------------------------------------------|
| Army           : 1999  : $8,982 : $9,683: $10,6 : $11,3 : $40,7 :        |
| procurement    :       :        :       :    53 :    82 :    00 :        |
|--------------------------------------------------------------------------|
|                : 2000  :  8,569 : 9,371 : 10,290: 11,770: 40,001:        |
|--------------------------------------------------------------------------|
|                : Change:   -413 :  -312 :  -363 :   388 :  -700 :  -1.7  |
|--------------------------------------------------------------------------|
| Navy/Marine    : 1999  : 21,322 : 25,484: 21,890: 22,481: 91,178:        |
| Corps          :       :        :       :       :       :       :        |
|--------------------------------------------------------------------------|
| procurement    : 2000  : 21,987 : 26,588: 23,488: 25,194: 97,257:        |
|--------------------------------------------------------------------------|
|                : Change:    665 : 1,104 : 1,598 : 2,713 : 6,079 :   6.7  |
|--------------------------------------------------------------------------|
| Air Force      : 1999  : 18,558 : 20,050: 20,807: 20,831: 80,245:        |
| procurement    :       :        :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                : 2000  : 19,166 : 20,947: 22,127: 22,092: 84,333:        |
|--------------------------------------------------------------------------|
|                : Change:    608 :   898 : 1,320 : 1,261 : 4,088 :   5.1  |
|--------------------------------------------------------------------------|
| Defensewide    : 1999  :  4,394 : 3,980 : 4,150 : 4,280 : 16,804:        |
|--------------------------------------------------------------------------|
| procurement    : 2000  :  3,299 : 3,833 : 4,250 : 3,955 : 15,337:        |
|--------------------------------------------------------------------------|
|                : Change: -1,095 :  -147 :   100 :  -326 : -1,467:  -8.7  |
|--------------------------------------------------------------------------|
| Total          : 1999  : $53,256: $59,1 : $57,5 : $58,9 : $228, :        |
|                :       :        :    96 :    01 :    75 :   928 :        |
|--------------------------------------------------------------------------|
|                : 2000  : $53,022: $60,7 : $60,1 : $63,0 : $236, :        |
|                :       :        :    40 :    55 :    11 :   928 :        |
|--------------------------------------------------------------------------|
|                : Change:  $-235 : $1,543: $2,655: $4,036: $8,000:   3.5  |
----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****6:    Army Procurement Appropriation Accounts,
                                1999 and 2000 FYDPs (total obligational
                                authority in millions of fiscal year 2000
                                dollars)

-----------------------------------------------------------------------------
| Appropriation    : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category         :       :       :       :       :       :       :    nt  |
|                  :       :       :       :       :       :       : change |
|                  :       :       :       :       :       :       : 2000-  |
|                  :       :       :       :       :       :       :  2003  |
|---------------------------------------------------------------------------|
| Aircraft         : 1999  : $1,350: $1,407: $1,902: $1,925: $6,584:        |
| procurement, Army:       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 1,230 : 1,290 : 1,858 : 2,142 : 6,519 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -120 :  -117 :   -45 :   217 :   -65 :  -1.0  |
|---------------------------------------------------------------------------|
| Missile          : 1999  : 1,409 : 1,463 : 1,410 : 1,193 : 5,475 :        |
| procurement, Army:       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 1,358 : 1,389 : 1,304 : 1,503 : 5,554 :        |
|---------------------------------------------------------------------------|
|                  : Change:   -51 :   -74 :  -107 :   310 :    79 :   1.4  |
|---------------------------------------------------------------------------|
| Procurement of   : 1999  : 1,541 : 1,560 : 1,700 : 1,774 : 6,575 :        |
| weapons and      :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| tracked combat   : 2000  : 1,417 : 1,474 : 1,642 : 1,646 : 6,180 :        |
| vehicles, Army   :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : Change:  -124 :   -86 :   -58 :  -128 :  -396 :  -6.0  |
|---------------------------------------------------------------------------|
| Procurement of   : 1999  : 1,138 : 1,190 : 1,417 : 1,545 : 5,290 :        |
| ammunition,      :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Army             : 2000  : 1,141 : 1,236 : 1,365 : 1,448 : 5,189 :        |
|---------------------------------------------------------------------------|
|                  : Change:     3 :    45 :   -52 :   -97 :  -101 :  -1.9  |
|---------------------------------------------------------------------------|
| Other            : 1999  : 3,544 : 4,062 : 4,224 : 4,945 : 16,776:        |
| procurement, Army:       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 3,424 : 3,982 : 4,122 : 5,031 : 16,559:        |
|---------------------------------------------------------------------------|
|                  : Change:  -121 :   -80 :  -102 :    86 :  -217 :  -1.3  |
|---------------------------------------------------------------------------|
| Total            : 1999  : $8,982: $9,683: $10,6 : $11,3 : $40,7 :        |
|                  :       :       :       :    53 :    82 :    00 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : $8,569: $9,371: $10,2 : $11,7 : $40,0 :        |
|                  :       :       :       :    90 :    70 :    01 :        |
|---------------------------------------------------------------------------|
|                  : Change: $-413 : $-312 : $-363 :  $388 : $-700 :  -1.7  |
-----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****7:    Navy/Marine Corps Procurement
                                Appropriation Accounts, 1999 and 2000
                                FYDPs (total obligational authority in
                                millions of fiscal year 2000 dollars)

-----------------------------------------------------------------------------
| Appropriation    : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category         :       :       :       :       :       :       :    nt  |
|                  :       :       :       :       :       :       : change |
|                  :       :       :       :       :       :       : 2000-  |
|                  :       :       :       :       :       :       :  2003  |
|---------------------------------------------------------------------------|
| Aircraft         : 1999  : $7,998: $7,515: $7,635: $7,418: $30,5 :        |
| procurement, Navy:       :       :       :       :       :    66 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 8,229 : 7,875 : 8,270 : 8,381 : 32,755:        |
|---------------------------------------------------------------------------|
|                  : Change:   231 :   361 :   635 :   963 : 2,189 :   7.2  |
|---------------------------------------------------------------------------|
| Weapons          : 1999  : 1,590 : 1,649 : 1,789 : 1,896 : 6,924 :        |
| procurement, Navy:       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 1,357 : 1,533 : 1,619 : 1,849 : 6,359 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -232 :  -116 :  -170 :   -46 :  -565 :  -8.2  |
|---------------------------------------------------------------------------|
| Shipbuilding     : 1999  : 6,118 : 11,144: 6,924 : 7,425 : 31,611:        |
| and conversion,  :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Navy             : 2000  : 6,678 : 12,019: 7,323 : 8,264 : 34,285:        |
|---------------------------------------------------------------------------|
|                  : Change:   560 :   875 :   399 :   839 : 2,674 :   8.5  |
|---------------------------------------------------------------------------|
| Ammunition       : 1999  :   481 :   459 :   474 :   536 : 1,950 :        |
| procurement,     :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Navy and Marine  : 2000  :   485 :   472 :   532 :   610 : 2,099 :        |
| Corps            :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : Change:     4 :    13 :    58 :    75 :   149 :   7.7  |
|---------------------------------------------------------------------------|
| Other            : 1999  : 4,173 : 3,711 : 4,096 : 4,265 : 16,244:        |
| procurement, Navy:       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 4,100 : 3,579 : 4,571 : 4,787 : 17,036:        |
|---------------------------------------------------------------------------|
|                  : Change:   -73 :  -132 :   475 :   522 :   792 :   4.9  |
|---------------------------------------------------------------------------|
| Procurement,     : 1999  :   962 : 1,007 :   972 :   942 : 3,883 :        |
| Marine Corps     :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 1,137 : 1,111 : 1,173 : 1,303 : 4,724 :        |
|---------------------------------------------------------------------------|
|                  : Change:   175 :   104 :   201 :   361 :   841 :  21.7  |
|---------------------------------------------------------------------------|
| Total            : 1999  : $21,3 : $25,4 : $21,8 : $22,4 : $91,1 :        |
|                  :       :    22 :    84 :    90 :    81 :    78 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : $21,9 : $26,5 : $23,4 : $25,1 : $97,2 :        |
|                  :       :    87 :    88 :    88 :    94 :    57 :        |
|---------------------------------------------------------------------------|
|                  : Change:  $665 : $1,104: $1,598: $2,713: $6,079:   6.7  |
-----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****8:    Air Force Procurement Appropriations
                                Accounts, 1999 and 2000 FYDPs (total
                                obligational authority in millions of
                                fiscal year 2000 dollars)

-----------------------------------------------------------------------------
| Appropriation    : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category         :       :       :       :       :       :       :    nt  |
|                  :       :       :       :       :       :       : change |
|                  :       :       :       :       :       :       : 2000-  |
|                  :       :       :       :       :       :       :  2003  |
|---------------------------------------------------------------------------|
| Aircraft         : 1999  : $8,084: $9,164: $9,846: $9,429: $36,5 :        |
| procurement,     :       :       :       :       :       :    24 :        |
| Air Force        :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 9,302 : 9,755 : 10,607: 10,637: 40,302:        |
|---------------------------------------------------------------------------|
|                  : Change: 1,218 :   591 :   761 : 1,208 : 3,778 :  10.3  |
|---------------------------------------------------------------------------|
| Missile          : 1999  : 2,754 : 3,077 : 3,168 : 3,339 : 12,338:        |
| procurement,     :       :       :       :       :       :       :        |
| Air Force        :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 2,360 : 3,281 : 3,573 : 3,351 : 12,564:        |
|---------------------------------------------------------------------------|
|                  : Change:  -395 :   204 :   405 :    12 :   226 :   1.8  |
|---------------------------------------------------------------------------|
| Procurement of   : 1999  :   539 :   697 :   657 :   754 : 2,647 :        |
| ammunition,      :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Air Force        : 2000  :   420 :   637 :   603 :   601 : 2,261 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -119 :   -60 :   -54 :  -154 :  -387 : -14.6  |
|---------------------------------------------------------------------------|
| Other            : 1999  : 7,182 : 7,111 : 7,136 : 7,308 : 28,736:        |
| procurement,     :       :       :       :       :       :       :        |
| Air Force        :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 7,085 : 7,274 : 7,343 : 7,503 : 29,206:        |
|---------------------------------------------------------------------------|
|                  : Change:   -96 :   163 :   208 :   195 :   470 :   1.6  |
|---------------------------------------------------------------------------|
| Total            : 1999  : $18,5 : $20,0 : $20,8 : $20,8 : $80,2 :        |
|                  :       :    58 :    50 :    07 :    31 :    45 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : $19,1 : $20,9 : $22,1 : $22,0 : $84,3 :        |
|                  :       :    66 :    47 :    27 :    92 :    33 :        |
|---------------------------------------------------------------------------|
|                  : Change:  $608 :  $898 : $1,320: $1,261: $4,088:   5.1  |
-----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****9:    Defensewide Procurement Appropriation
                                Accounts, 1999 and 2000 FYDPs (total
                                obligational authority in millions of
                                fiscal year 2000 dollars)

-----------------------------------------------------------------------------
| Appropriation    : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category         :       :       :       :       :       :       :    nt  |
|                  :       :       :       :       :       :       : change |
|                  :       :       :       :       :       :       : 2000-  |
|                  :       :       :       :       :       :       :  2003  |
|---------------------------------------------------------------------------|
| Procurement,     : 1999  : $3,262: $2,996: $3,060: $3,463: $12,7 :        |
| Defensewide      :       :       :       :       :       :    81 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : 2,129 : 2,862 : 3,176 : 3,151 : 11,319:        |
|---------------------------------------------------------------------------|
|                  : Change: -1,133:  -134 :   117 :  -312 : -1,463: -11.4  |
|---------------------------------------------------------------------------|
| Chemical agents  : 1999  : 1,131 :   982 : 1,089 :   816 : 4,018 :        |
| and munitions    :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| destruction,     : 2000  : 1,169 :   969 : 1,074 :   804 : 4,016 :        |
| defense          :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : Change:    38 :   -12 :   -15 :   -12 :    -2 :   0.0  |
|---------------------------------------------------------------------------|
| Defense export   : 1999  :     1 :     1 :     1 :     1 :     6 :        |
| loan             :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| guarantees       : 2000  :     1 :     1 :       :       :     2 :        |
|---------------------------------------------------------------------------|
|                  : Change:     0 :     0 :    -1 :    -1 :    -3 : -57.0  |
|---------------------------------------------------------------------------|
| Total            : 1999  : $4,394: $3,980: $4,150: $4,280: $16,8 :        |
|                  :       :       :       :       :       :    04 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : $3,299: $3,833: $4,250: $3,955: $15,3 :        |
|                  :       :       :       :       :       :    37 :        |
|---------------------------------------------------------------------------|
|                  : Change:    $- : $-147 :  $100 : $-326 :    $- :  -8.7  |
|                  :       : 1,095 :       :       :       : 1,467 :        |
-----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****10:    Research, Development, Test, and
                                 Evaluation Appropriation Accounts, 1999
                                 and 2000 FYDPs (total obligational
                                 authority in millions of fiscal year 2000
                                 dollars)

----------------------------------------------------------------------------
| Appropriation   : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category        :       :       :       :       :       :       :    nt  |
|                 :       :       :       :       :       :       : change |
|                 :       :       :       :       :       :       : 2000-  |
|                 :       :       :       :       :       :       :  2003  |
|--------------------------------------------------------------------------|
| Research,       : 1999  : $4,696: $4,751: $4,651: $4,555: $18,6 :        |
| development,    :       :       :       :       :       :    54 :        |
|--------------------------------------------------------------------------|
| test, and       : 2000  : 4,426 : 4,665 : 4,747 : 4,427 : 18,266:        |
| evaluation      :       :       :       :       :       :       :        |
| (RDT&E),        :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| Army            : Change:  -270 :   -86 :    96 :  -128 :  -388 :  -2.1  |
|--------------------------------------------------------------------------|
| RDT&E, Navy     : 1999  : 7,512 : 7,011 : 7,302 : 7,711 : 29,536:        |
|--------------------------------------------------------------------------|
|                 : 2000  : 7,984 : 7,832 : 8,009 : 7,760 : 31,585:        |
|--------------------------------------------------------------------------|
|                 : Change:   472 :   820 :   708 :    49 : 2,049 :   6.9  |
|--------------------------------------------------------------------------|
| RDT&E, Air Force: 1999  : 12,459: 11,914: 12,174: 12,255: 48,802:        |
|--------------------------------------------------------------------------|
|                 : 2000  : 13,078: 12,527: 12,301: 12,471: 50,377:        |
|--------------------------------------------------------------------------|
|                 : Change:   619 :   613 :   127 :   216 : 1,575 :   3.2  |
|--------------------------------------------------------------------------|
| RDT&E, defense- : 1999  : 8,551 : 8,037 : 7,517 : 7,226 : 31,331:        |
| wide            :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                 : 2000  : 8,609 : 8,376 : 8,115 : 7,684 : 32,785:        |
|--------------------------------------------------------------------------|
|                 : Change:    58 :   339 :   598 :   458 : 1,453 :   4.6  |
|--------------------------------------------------------------------------|
| Director test   : 1999  :   260 :   255 :   246 :   255 : 1,016 :        |
| and             :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| evaluation,     : 2000  :   253 :   249 :   240 :   248 :   991 :        |
| defense         :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                 : Change:    -6 :    -6 :    -6 :    -7 :   -25 :  -2.5  |
|--------------------------------------------------------------------------|
| Director,       : 1999  :    25 :    24 :    24 :    24 :    98 :        |
| Operational     :       :       :       :       :       :       :        |
| test and        :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| evaluation,     : 2000  :    24 :    24 :    24 :    23 :    95 :        |
| defense         :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
|                 : Change:    -1 :    -1 :    -1 :    -1 :    -3 :  -3.5  |
|--------------------------------------------------------------------------|
| Total           : 1999  : $33,5 : $31,9 : $31,9 : $32,0 : $129, :        |
|                 :       :    03 :    93 :    15 :    26 :   437 :        |
|--------------------------------------------------------------------------|
|                 : 2000  : $34,3 : $33,6 : $33,4 : $32,6 : $134, :        |
|                 :       :    75 :    73 :    36 :    14 :   098 :        |
|--------------------------------------------------------------------------|
|                 : Change:  $872 : $1,679: $1,521:  $588 : $4,661:   3.6  |
----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****11:    Military Construction Appropriation
                                 Accounts, 1999 and 2000 FYDPs (total
                                 obligational authority in millions of
                                 fiscal year 2000 dollars)

(Continued from Previous Page)
-----------------------------------------------------------------------------
| Appropriation    : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category         :       :       :       :       :       :       :    nt  |
|                  :       :       :       :       :       :       : change |
|                  :       :       :       :       :       :       : 2000-  |
|                  :       :       :       :       :       :       :  2003  |
|---------------------------------------------------------------------------|
| Military         : 1999  :  $935 :  $849 :  $922 :  $713 : $3,419:        |
| construction,    :       :       :       :       :       :       :        |
| Army             :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  :   656 : 1,581 : 1,032 :   872 : 4,141 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -279 :   732 :   110 :   160 :   722 :  21.1  |
|---------------------------------------------------------------------------|
| Military         : 1999  :   700 :   728 :   772 :   876 : 3,077 :        |
| construction,    :       :       :       :       :       :       :        |
| Navy             :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  :   320 : 1,240 :   846 :   954 : 3,359 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -380 :   512 :    73 :    78 :   282 :   9.2  |
|---------------------------------------------------------------------------|
| Military         : 1999  :   446 :   501 :   592 :   602 : 2,141 :        |
| construction,    :       :       :       :       :       :       :        |
| Air Force        :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  :   179 :   898 :   590 :   580 : 2,247 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -267 :   397 :    -2 :   -22 :   106 :   5.0  |
|---------------------------------------------------------------------------|
| Military         : 1999  :   800 :   517 :   497 :   799 : 2,614 :        |
| construction,    :       :       :       :       :       :       :        |
| defense-wide     :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000  :   193 : 1,107 :   783 :   926 : 3,009 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -607 :   590 :   286 :   126 :   395 :  15.1  |
|---------------------------------------------------------------------------|
| Military         : 1999  :    79 :    73 :    70 :    69 :   290 :        |
| construction,    :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Army Reserve     : 2000  :    23 :   140 :    68 :    57 :   288 :        |
|---------------------------------------------------------------------------|
|                  : Change:   -56 :    68 :    -2 :   -12 :    -2 :  -0.7  |
|---------------------------------------------------------------------------|
| Military         : 1999  :    21 :    21 :    22 :    34 :    99 :        |
| construction,    :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Navy Reserve     : 2000  :     5 :    29 :    23 :    21 :    78 :        |
|---------------------------------------------------------------------------|
|                  : Change:   -16 :     9 :     1 :   -14 :   -20 : -20.7  |
|---------------------------------------------------------------------------|
| Military         : 1999  :    60 :    46 :    45 :    45 :   197 :        |
| construction,    :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Army National    : 2000  :    16 :    88 :    51 :    46 :   201 :        |
| Guard            :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : Change:   -44 :    41 :     5 :     2 :     4 :   2.0  |
|---------------------------------------------------------------------------|
| Military         : 1999  :   106 :   119 :    53 :    55 :   332 :        |
| construction,    :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Air National     : 2000  :    21 :   107 :    48 :    54 :   230 :        |
| Guard            :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : Change:   -84 :   -13 :    -5 :     0 :  -102 : -30.7  |
|---------------------------------------------------------------------------|
| Military         : 1999  :    26 :    29 :    32 :    33 :   119 :        |
| construction,    :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Air Force Reserve: 2000  :    12 :    35 :    23 :    29 :    99 :        |
|---------------------------------------------------------------------------|
|                  : Change:   -13 :     5 :    -9 :    -3 :   -20 : -16.8  |
|---------------------------------------------------------------------------|
| North Atlantic   : 1999  :   289 :   330 :   368 :   358 : 1,345 :        |
| Treaty           :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Organization     : 2000  :   202 :   205 :   255 :   249 :   911 :        |
| Security         :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Investment       : Change:   -87 :  -125 :  -113 :  -109 :  -434 : -32.2  |
| Program          :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Base             : 1999  : 1,361 : 1,037 :   151 :   109 : 2,658 :        |
| realignment and  :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| closure          : 2000  :   689 : 1,540 :    59 :    25 : 2,313 :        |
| accounts, III-IV :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : Change: $-672 :  $503 :  $-92 :  $-84 : $-346 : -13.0  |
|---------------------------------------------------------------------------|
| Base             : 1999  :       :       :       :       :     0 :        |
| realignment and  :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| closure accounts,: 2000  :       :       :  $319 :  $283 :  $602 :        |
|---------------------------------------------------------------------------|
| environmental    : Change:     0 :     0 :   319 :   283 :   602 :        |
| restoration      :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Total            : 1999  : $4,824: $4,250: $3,523: $3,692: $16,2 :        |
|                  :       :       :       :       :       :    90 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : $2,317: $6,969: $4,095: $4,097: $17,4 :        |
|                  :       :       :       :       :       :    78 :        |
|---------------------------------------------------------------------------|
|                  : Change:    $- : $2,719:  $572 :  $404 : $1,188:   7.3  |
|                  :       : 2,507 :       :       :       :       :        |
-----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****12:    Family Housing Appropriation Accounts,
                                 1999 and 2000 FYDPs (total obligational
                                 authority in millions of fiscal year 2000
                                 dollars)

-----------------------------------------------------------------------------
| Appropriation    : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category         :       :       :       :       :       :       :    nt  |
|                  :       :       :       :       :       :       : change |
|                  :       :       :       :       :       :       : 2000-  |
|                  :       :       :       :       :       :       :  2003  |
|---------------------------------------------------------------------------|
| Family housing,  : 1999^a: $1,225: $1,194: $1,199: $1,228: $4,846:        |
| Army             :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000^a: 1,112 : 1,044 :   975 : 1,018 : 4,150 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -113 :  -150 :  -224 :  -210 :  -696 : -14.4  |
|---------------------------------------------------------------------------|
| Family housing,  : 1999^a: 1,184 : 1,170 : 1,180 : 1,172 : 4,706 :        |
| Navy and         :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| Marine Corps     : 2000^a:   960 : 1,222 : 1,103 : 1,069 : 4,354 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -224 :    52 :   -77 :  -103 :  -352 :  -7.5  |
|---------------------------------------------------------------------------|
| Family housing,  : 1999^a: 1,064 : 1,064 : 1,065 : 1,058 : 4,252 :        |
| Air Force        :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000^a:   924 : 1,256 : 1,301 : 1,338 : 4,818 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -140 :   192 :   236 :   280 :   567 :  13.3  |
|---------------------------------------------------------------------------|
| Family housing,  : 1999^a:    38 :    37 :    36 :    35 :   145 :        |
| defensewide      :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
|                  : 2000^a:    41 :    43 :    43 :    42 :   169 :        |
|---------------------------------------------------------------------------|
|                  : Change:     4 :     6 :     7 :     7 :    24 :  16.4  |
|---------------------------------------------------------------------------|
| Homeowner's      : 1999  :       :       :       :       :     0 :        |
| assistance       :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| fund, defense    : 2000  :    63 :    50 :       :       :   113 :        |
|---------------------------------------------------------------------------|
|                  : Change:    63 :    50 :     0 :     0 :   113 :        |
|---------------------------------------------------------------------------|
| DOD family       : 1999  :   335 :   327 :   190 :   373 : 1,224 :        |
| housing          :       :       :       :       :       :       :        |
|---------------------------------------------------------------------------|
| improvement fund : 2000  :    79 :   172 :    71 :    84 :   406 :        |
|---------------------------------------------------------------------------|
|                  : Change:  -256 :  -154 :  -119 :  -288 :  -818 : -66.8  |
|---------------------------------------------------------------------------|
| Total            : 1999  : $3,845: $3,792: $3,669: $3,866: $15,1 :        |
|                  :       :       :       :       :       :    72 :        |
|---------------------------------------------------------------------------|
|                  : 2000  : $3,178: $3,788: $3,492: $3,551: $14,0 :        |
|                  :       :       :       :       :       :    10 :        |
|---------------------------------------------------------------------------|
|                  : Change: $-666 :   $-4 : $-177 : $-315 :    $- :  -7.7  |
|                  :       :       :       :       :       : 1,162 :        |
-----------------------------------------------------------------------------

^aIncludes both Family Housing, Construction and Family Housing,
Operations Appropriations

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****13:    Revolving and Management Funds, 1999 and
                                 2000 FYDPs (total obligational authority
                                 in millions of fiscal year 2000 dollars)

---------------------------------------------------------------------------
| Appropriation  : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category       :       :       :       :       :       :       :    nt  |
|                :       :       :       :       :       :       : change |
|                :       :       :       :       :       :       : 2000-  |
|                :       :       :       :       :       :       :  2003  |
|-------------------------------------------------------------------------|
| DOD working    : 1999  :  $443 :     0 :     0 :  $654 : $1,097:        |
| capital funds  :       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
|                : 2000  :    90 :  $384 :  $149 :   299 :   922 :        |
|-------------------------------------------------------------------------|
|                : Change:  -353 :   384 :   149 :  -354 :  -174 : -15.9  |
|-------------------------------------------------------------------------|
| National       : 1999  :   331 :   356 :   354 :   356 : 1,398 :        |
| defense sealift:       :       :       :       :       :       :        |
|-------------------------------------------------------------------------|
| fund           : 2000  :   355 :   372 :   369 :   371 : 1,466 :        |
|-------------------------------------------------------------------------|
|                : Change:    23 :    15 :    15 :    15 :    68 :   4.9  |
|-------------------------------------------------------------------------|
| Total          : 1999  :  $775 :  $356 :  $354 : $1,009: $2,494:        |
|-------------------------------------------------------------------------|
|                : 2000  :  $445 :  $756 :  $517 :  $670 : $2,388:        |
|-------------------------------------------------------------------------|
|                : Change: $-329 :  $399 :  $163 : $-339 : $-106 :  -4.3  |
---------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

Table****Helvetica:x11****14:    Defensewide Contingencies, 1999 and 2000
                                 FYDPs (total obligational authority in
                                 millions of fiscal year 2000 dollars)

----------------------------------------------------------------------------
| Appropriation   : FYDP  :  2000 :  2001 :  2002 :  2003 : Total : Perce  |
| category        :       :       :       :       :       :       :    nt  |
|                 :       :       :       :       :       :       : change |
|                 :       :       :       :       :       :       : 2000-  |
|                 :       :       :       :       :       :       :  2003  |
|--------------------------------------------------------------------------|
| Undistributed   : 1999  :    $1 :    $1 :  $791 : $1,346: $2,139:        |
| contingencies,  :       :       :       :       :       :       :        |
|--------------------------------------------------------------------------|
| defense         : 2000  :     0 :     0 :  $790 : $1,342: $2,132:        |
|--------------------------------------------------------------------------|
|                 : Change:   $-1 :   $-1 :   $-1 :   $-4 :   $-7 :  -0.3  |
----------------------------------------------------------------------------

Note: Totals may not add due to rounding.

Source: Our analysis of FYDP data.

COMMENTS FROM THE DEPARTMENT OF DEFENSE
=======================================

*****************
<Graphic -- Download the PDF file to
view.>
*****************

(702003)

Figure 1:  Annual Military Personnel Funding Levels in 1999 and 
2000 FYDPs (in billions of fiscal year 2000 dollars)16

Figure 2:  Annual Operation and Maintenance Funding Levels (in 
1999 and 2000 FYDPS)                            19

Figure 3:  Annual Defense Health Program Funding Levels in 1999 
and 2000 FYDPs (in billions of fiscal year 2000 dollars)21

Figure 4:  Annual Procurement Funding Levels in the 1999 and 
2000 FYDPs (in billions of fiscal year 2000 dollars)25

Figure 5:  Annual Family Housing Funding Levels in the 1999 
and 2000 FYDPs (in billions of constant fiscal year 2000 dollars)28

Figure 6:  Mission and Direct Infrastructure Programs in 1999 
and 2000 FYDPs                                  33

Figure 7:  Military Personnel Levels in the 1999 and 2000 FYDPs 
(military personnel in thousands)               37

Figure 8:  Civilian Personnel Levels in the 1999 and 2000 FYDPs 
(civilian personnel in thousands)               38

Table 1:  DOD's 1999 and 2000 FYDPs, by Primary Appropriation 
Category (total obligational authority in billions of fiscal 
year 2000 dollars)                               9

Table 2:  Sources of DOD's 2000 FYDP Savings    13

Table 3:  Military Personnel Appropriation Accounts, 1999 and 
2000 FYDPs (total obligational authority in millions of fiscal 
year 2000 dollars)                              43

Table 4:  Operation and Maintenance Appropriation Accounts, 
1999 and 2000 FYDPs (total obligational authority in millions 
of fiscal year 2000 dollars)                    45

Table 5:  Procurement Appropriation Category by Component, 
1999 and 2000 FYDPs (total obligational authority in millions 
of fiscal year 2000 dollars)                    47

Table 6:  Army Procurement Appropriation Accounts, 1999 and 
2000 FYDPs (total obligational authority in millions of fiscal
year 2000 dollars)                              48

Table 7:  Navy/Marine Corps Procurement Appropriation 
Accounts, 1999 and 2000 FYDPs (total obligational authority 
in millions of fiscal year 2000 dollars)        49

Table 8:  Air Force Procurement Appropriations Accounts, 1999 
and 2000 FYDPs (total obligational authority in millions of 
fiscal year 2000 dollars)                       50

Table 9:  Defensewide Procurement Appropriation Accounts, 
1999 and 2000 FYDPs (total obligational authority in millions 
of fiscal year 2000 dollars)                    51

Table 10:  Research, Development, Test, and Evaluation 
Appropriation Accounts, 1999 and 2000 FYDPs (total 
obligational authority in millions of fiscal year 2000 dollars)52

Table 11:  Military Construction Appropriation Accounts, 1999 
and 2000 FYDPs (total obligational authority in millions of 
fiscal year 2000 dollars)                       53

Table 12:  Family Housing Appropriation Accounts, 1999 and 
2000 FYDPs (total obligational authority in millions of fiscal 
year 2000 dollars)                              55

Table 13:  Revolving and Management Funds, 1999 and 2000 
FYDPs (total obligational authority in millions of fiscal year 
2000 dollars)                                   56

Table 14:  Defensewide Contingencies, 1999 and 2000 FYDPs 
(total obligational authority in millions of fiscal year 2000 
dollars)                                        56

*** End of document. ***